House prices in the UK rose 11.2% year-on-year in May, according to Nationwide.
The lender’s monthly house price index shows price growth slowed slightly for the second successive month, having risen by 12.1% in April and 14.3% in March, which was the fastest annual rise for 17 years. Monthly prices rose 0.9% for the ninth successive month.
Robert Gardner, chief economist at Nationwide said the housing market is showing “surprising momentum” but expects the market to slow throughout the rest of the year.
He said: “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.”
Average house prices (according to Nationwide)
The figures follow Bank of England data yesterday suggesting the Bank of England’s decision to raise interest rates may be having an impact on mortgage lending.
The data shows monthly net mortgage debt fell by a third in April to £4.1billion following increases to the base rate of interest. Mortgage approvals also fell from 69,500 in April to 66,000 in March, with both approvals and mortgage debt slightly below their 12 month pre-pandemic average for the year to February 2020.
The Bank of England increased its base rate from 0.25% to 0.5% on 3 February and then to 0.75% on 17 March and 1% on 5 May.