The average price of a house in the UK rose by just 0.1% in June, says Nationwide, down from a 0.5% increase in May while the annual rate of house price inflation has dropped from 9.8% to 8.7%.
Barring a significant pick-up in prices over the coming months, the mortgage lender predicted that the annual rate of inflation will probably continue to drop, in light of the very strong price increases recorded during the summer of 2009; over the first half of this year alone prices have risen by a cumulative 3%.
Nationwide's Chief Economist Martin Gahbauer commented: ‘Recent indicators point to an increase in the supply of property coming to the market for sale, perhaps in response to the abolition of HIPs in the opening days of the new government.
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‘As the level of demand remains broadly stable, this would in part help to explain the recent slowdown observed in the rate of house price inflation.'
Following last week's Budget, Nationwide expects that house price inflation should remain neutral in coming months provided the economy doesn't slip back into recession, in keeping with the relative stability of the housing market in the last fiscal consolidation in the mid-1990s.
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