House prices unexpectedly fell last month, taking the annual rate of price increases to its lowest in two years, mortgage lender Nationwide said on Thursday.
Nationwide said house prices dropped by 0.2 per cent on the month in June, well below economists’ forecasts of a 0.2 per cent rise. This pushed the annual rate of growth to a two-year low of 3.3 per cent from 4.6 per cent in May.
“This maintains the gradual downward trend that has been in evidence since mid-2014,” Nationwide economist Robert Gardner said.
“House price growth continues to outpace earnings, but the gap is closing, helped by a pick-up in annual wage growth.“
A year ago Nationwide reported annual house price inflation of 11.8 per cent, but tighter lending rules from regulators have slowed the pace of price rises. Many economists think this will prove temporary, however, as the number of new homes being built is insufficient to keep up with demand, and wages are starting to grow faster.
“House prices are likely to be firmer over the second half of the year amid improving activity. A current shortage of properties on the market is also likely to provide support to house prices,” said Howard Archer, chief UK economist at IHS Global Insight.