House prices have risen by 0.2% in May, just 0.1% more than last month, according to the Nationwide?s latest report. Although a positive figure, it is still down on the 1.1% growth recorded in March, and serves as an indicator that continuing house price growth cannot be taken for granted, according to the mortgage lender.

The year on year change slowed slightly, to 4.7% in May from 4.8% lat month, leaving the average price of a house in the UK at £164,632, from £163,573 in April: almost £7,500 more than at this time last year.

Fionnuala Earley, group economist at Nationwide, noted the positive talk around continued house price inflation for the future in the report: ?Activity this strong was last seen when house price inflation was in double digits two years ago? estate agents? sales to stock ratios are also high, suggesting the potential for further house price growth, and the revival of the London market has also added to the sentiment that the market is picking up,? she said.

However, Ms Earley also said that there are signs that the market is cooling overall: ?Despite all this it is important to keep in mind that not all drivers are supportive of rising house price inflation,? she said. ?Even arch-hawk Mervyn King cautions that continued strong growth should not be taken for granted given the level of house prices relative to incomes.?

Kelvin Davidson property economist at Capital Economics added that this new data brings little to alter their predictions: ?We speculate also that an imminent rise in the repro rate will tend to dampen the housing market, but overall today?s data do little to change our view that the general trend will be a cooling in the rate of house price growth over 2006,? he commented.

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