UK house prices grew for a tenth consecutive month in May, according to Nationwide’s House Price Index, but the rate of growth appeared to be decelerating as the ongoing cost of living crisis looked set to weigh on prices.
The average price of a home in the UK rose 11.2% in May to £269,914, slowing slightly from the more than 12% growth seen back in April but still resulting in property prices, on average, growing by nearly £2,300 in just a single month. Prices were up 0.9% month-on-month after taking into account seasonal effects.
Nationwide chief economist Robert Gardner said: “Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising amount of momentum.
“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, and with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.”
Looking forward, Gardner highlighted that household finances were likely to remain “under pressure”, with inflation set to reach double-digits in the coming quarters if global energy prices remain high as measures of consumer confidence already slumped towards record lows.
“Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates,” added Gardner.
Reporting by Iain Gilbert at Sharecast.com
