London house prices fall as British property market continues to cool
UK house-price growth has slowed to the weakest pace in five years, while London values are falling, according to Nationwide Building Society.
The lender said the "subdued economic activity" and squeezed household budgets are keeping a lid on demand, and the UK national market is unlikely to see any change to the recent trend in the near term.
Nationwide's monthly report showed UK prices rose 2pc in June from a year earlier, down from 2.4pc in May. London is the worst-performing market, with values down 1.9pc in the second quarter, it said.
The lender expects UK property-price inflation to continue to weaken, with prices rising just 1pc this year.
"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," said Robert Gardner, chief economist at Nationwide. "Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates."
The Bank of England held off raising interest rates in May, though it's hinted monetary policy may tighten at some point later this year. It raised benchmark borrowing costs to 0.5pc in November, the first hike in a decade. Recent housing reports have been downbeat in recent months. The Royal Institution of Chartered Surveyors' gauge of house prices came in at minus three last month.
Lucy Meakin (Bloomberg)