2nd July 2015
Nationwide reports house prices dipped 0.2% in June causing year-on-year gains to slow sharply to a 2-year low of 3.3%
The monthly drop follows increases of 1% in April and 0.2% in May, when the yearly rate of inflation was at 4.6%.
However, it still remained significantly off the previous peak of 11.8% in June 2014.
But despite June’s dip, house prices rose 1% quarter-on-quarter during the April to end of June period. This was up from an increase of 0.6% quarter-on-quarter in the first three months of 2015.
Howard Archer, chief UK and European economist at IHS Global Insight says: “While we are slightly surprised by June’s dip in house prices, it does not fundamentally change our view that 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.”
Archer believes that house prices will rise by 6% over 2015 and by around 5% in 2016.
He noted the latest data and survey evidence indicate overall that housing market activity is on the up, and he suspects that it will continue to improve amid “generally supportive fundamentals and reduced uncertainty following the general election”.
Archer added: “Meanwhile, a shortage of properties coming on to the market is currently exerting increasing upward pressure on house prices.
“Nevertheless, the upside for housing market activity and prices is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the likelihood that interest rates will start rising gradually from the first quarter of 2016.”