Once again, the capital was the weakest performing region in Q2, with prices down 1.9% year-on-year.
According to the figures, most regions saw a slowing in the annual rate of house price growth in the second quarter. The only region to see a notable pickup was Scotland, where price growth accelerated to 3.1%. Northern Ireland recorded annual price growth of 2.1%, similar to the UK average, after posting an unusually strong growth rate in the first quarter (7.9%). Wales also saw a softening in price growth to 4% (from 6.1% in Q1).
The East Midlands was the region that saw the strongest pace of growth in Q2, with prices up 4.4% year-on-year, just nudging ahead of the West Midlands at 4.3%.
Robert Gardner, Nationwide's Chief Economist, commented on the figures: “Annual house price growth fell to its slowest pace for five years in June. However, at 2% this was only modestly below the 2.4% recorded the previous month.
Indeed, annual house price growth has been confined to a fairly narrow range of c2-3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period.There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.
Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
Overall, we continue to expect house prices to rise by around 1% over the course of 2018."
As ever, the industry was quick to react. Here's what they're saying:
Jeremy Leaf, north London estate agent and a former RICS residential chairman, comented: "On the one hand, the squeeze on incomes and unrealistic asking prices is reducing activity and confidence to move, particularly in price-sensitive areas such as London.
On the other hand, the market continues to be supported by low interest rates and overall supply shortages, although we have found recently that listings and viewings are on the rise. This will translate into more sales if buyers and sellers recognise the new market realities."
Mike Scott, chief property analyst at Yopa, says: "Nationwide indicates a modest rise in prices for the month, but a fall in the yearly rate of growth to just 2 per cent, which is in line with other recent reports. Nationwide reports that supply and demand are slow, with little change expected in the immediate future, and is sticking with its forecast that the annual rate of growth will fall to 1 per cent by the end of this year.
The national figure of 2 per cent year-on-year growth masks some significant regional variations. The quarterly figures show that both the East and West Midlands are more than 4 per cent up on last year, well ahead of the rate of inflation, while London remains the weakest region and is the only region to show a year-on-year fall, down by 1.9 per cent. However, this needs to be put into perspective as London is still the best-performing region in the longer term, with prices more than 50 per cent ahead of their 2007 peak before the credit crunch. Meanwhile, prices in Wales, Scotland, Northern Ireland and northern England are below their 2007 levels."
Jonathan Samuels, CEO of Octane Capital, had this to say: "Prices may have nudged up slightly in June but the market overall is in marked slowdown mode.
With Brexit on the horizon, households feeling the pinch and interest rate uncertainty lingering, a lot of prospective buyers are sitting tight. Nationally, we're witnessing the revenge of the regions, with the East and West Midlands in especially barnstorming form. Wales also has a significant spring in its step.
London is in a league of its own once again, but sadly, for homeowners in the capital, it's the bottom league. The fact prices in the capital are still 50% higher than in 2007, compared to just 15% in the UK as a whole, shows the staggering heights the London market hit.
While annual prices overall are edging down, they can only go so far given the fundamental lack of stock. Along with weak supply, the strength of the jobs market and continued low borrowing costs will continue to support the market and drive transactions."
