House price growth slows in May

3 June 2015
Annual house price growth slowed to a 21-month low of 4.6% in May as prices rose by just 0.3% during the month, Nationwide Building Society said. But housing experts predict prices will begin climbing fast once more in the wake of the Conservatives winning the General Election. The slowdown in annual growth - from 5.2% in April - continues the "gradual downward trend" that has been in evidence since the summer of 2014, the mutual added. Annual house price growth is now running at "less than half the pace" of growth experienced in the middle of last year. It takes the average price of a home in the UK to £195,166, though house prices in the capital were more than twice the rest of the UK in the first quarter of 2015 – £408,708 compared with £188,566.Get help finding the best mortgage for you Firming in pricesCommenting on Nationwide's findings, Howard Archer, chief UK and European economist at IHS Global Insight, said: "While May's increase was modest, it did follow a 1% rise in house prices in April; and there are signs of an underlying firming in house prices. "We suspect that housing market activity will improve amid generally supportive fundamentals and will also benefit from reduced uncertainty following the decisive general election result." Jonathan Hopper, managing director of buying agent Garrington Property Finders, was even more bullish: "May was the month when the housing market reset its compass, and these figures confirm that its upward price momentum was unchecked. For the Nationwide's May figures to show such steady price increases gives a flavour of further growth to come. We suspect it's only a matter of time before its national average price hits the symbolic £200,000 mark." Charlie Wells, managing director of buying agency Prime Purchase, added: "Now that we have the Conservative government in place, the housing market is livelier than before the general election because it has certainty. At the upper end at least, there is relief that there will be no mansion tax or changes to non-dom status. "But the problem is stock levels: there is not a lot of property on the market. Vendors who have been sitting on their hands because of election uncertainty are not yet making the decision to sell up. "Vendors may be waiting until the summer is out of the way and planning on selling in the autumn when everyone is back from their holidays so it may be too early to tell whether this situation will change." Nationwide also said that almost two in five people buying homes in the UK do not need a mortgage. It found that 38% of homebuyers paid cash for their property in the first quarter of 2015 - a record high. The building society pointed out this came at a time when mortgage lending was "subdued", with mortgage completions down by 11% on the same period in 2014. The number of people paying by cash was 36% last year. Credit tighteningRobert Gardner, the Nationwide's chief economist, pointed out that the rise in the number of cash buyers comes in the wake of the financial crisis when lenders have tightened their credit conditions and unemployment has limited the number of people able to buy with a mortgage. Surprisingly, the findings reveal that London does not buck the trend when it comes to cash transactions, despite the number of domestic and overseas investors involved in the London property market. Meanwhile, the Bank of England has reported that the number of mortgage approvals rose in April to a 14-month high - which could stem the rise of cash buyers in the market.

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