Modest increase in annual house price growth

After taking into account seasonal effects, prices rose by 0.1% month-on-month - making it the 12th successive monthly increase. This, in turn, has kept annual price growth in the double digits for the ninth month in a row. 

Nationwide’s chief economist Robert Gardner said the housing market has been able to retain a “surprising degree of momentum” given the pressures on household budgets from high inflation. 

He added: “While there are tentative signs of a slowdown in activity, with a dip in the number mortgage approvals for house purchase in June, this has yet to feed through to price growth. 

“Demand continues to be supported by strong labour market conditions, where unemployment rate remains ner 50-year lows and with the number of job vacancies close to record highs. At the same time, the limited stock of homes on the market has helped keep upward pressure on house prices.” 

Despite this, Nationwide’s researchers expect the market to slow as pressure on household budgets intensifies. 

This is already being seen in the number of transactions being made, with the total number being made in the three months to May were around 20% below the elevated levels resulting from the stamp duty holiday, although this is five percent above pre-pandemic levels. 

Looking at the figures as a whole, home mover transactions made by those with a mortgage have slowed more than other sectors. This, according to Gardner, probably reflects the stamp duty had more of an impact by encouraging home movers to bring forward purchases - particularly for higher value properties. 

First time buyer mortgage completions, meanwhile, have remained resilient - with it now around five percent above pre-pandemic levels, despite growing affordability pressures. In addition to this, house price growth has continued to outpace earnings by a wide margin, increasing the deposit hurdle and pushing up mortgage repayments relative to incomes. 

The number of cash transactions have also remained elevated, though its share of activity has remained stable at around 35%. Gardner added: “This is partly a reflection of an ageing population (where more people own their homes outright). 

“However, properties purchased for investment, such as a holiday home or buy to let, is also an important element of the cash market. Buy to let purchases involving a mortgage also remain higher than pre-pandemic levels. 

“Sentiment is likely buoyed by the fact that rental demand remains strong, with upward pressure on rents, which may be encouraging landlords to enter the market, particularly if they view property as a hedge against inflation.”