Third month in a row of falling house prices a first since 2009 - Nationwide

UK house prices suffered their third consecutive monthly decline for the first time since 2009 last month, according to latest data from Nationwide.

Annual house price growth has now dipped to its slowest pace for almost four years at 2.1 per cent, providing further evidence that housing market is “losing momentum”, the mortgage giant said.

This stands in contrast to property prices last year which rose by 4.5 per cent in 2016.

Prices dropped 0.2 per cent in May, although the lender said it remains unclear where the downward direction with become a long-term trend.

The building society also said the slowdown could be linked to the recent squeeze on household budgets caused by the weakness of the pound.

Prices have been rising as the cost of imported goods goes up. At the same time, inflation has overtaken wage growth.

It also said “affordability pressures” in certain parts of the country could be to blame.

Robert Gardner, Nationwide’s chief economist, said: “It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country.

“Given the ongoing uncertainties around the UK’s future trading arrangements and the upcoming election, the economic outlook is unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.

“Nevertheless, in our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation increases the squeeze on household budgets. This, together with mounting housing affordability pressures, is likely to exert a drag on activity and house price growth in the quarters ahead.

“However, the subdued level of building activity and the shortage of properties on the market are likely to provide support for prices. As a result, we continue to believe that a small increase in house prices of around 2 per cent is likely over the course of 2017 as a whole.”