Nationwide: House prices up 11.2% but early signs market is slowing

House price inflation remains in double-digits, according to Nationwide Building Society, but it said there were early signs the red-hot property market was cooling.

Annual house price growth slowed to 11.2 per cent in May from 12.1 per cent in April, according to Nationwide’s index, but that still means the average home costs £27,082 more than a year ago, at £269,914.

Nationwide said the property market was holding up better than expected in the face of the cost of living crisis and rising mortgage rates, but that house price rises would slow over the rest of the year.

Nationwide’s 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.

‘We continue to expect the housing market to slow as the year progresses. Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high.

‘Measures of consumer confidence have already fallen 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.’