Annual house price inflation plateaued at 10.2 per cent in June, the same level as May, but still ahead of 6.9 per cent growth seen last June.
The latest Hometrack index also revealed Bristol remains the fastest growing city in the UK with a year on year growth rate of 14.7 per cent, but year-on-year house price inflation in London and in other cities in the south of England - such as Cambridge, Southampton and Bournemouth - started to slow between May and June.
Conversely, large cities in northern parts of the UK - such as Glasgow, Manchester, Liverpool and Leeds - registered strong growth in the last quarter, on the back of more affordable prices, lower interest rates, improving local economies and higher yields.
Time lags means official data is slow to pick up changes and housing is notoriously slow for changes of direction to emerge, admitted Hometrack.
However, its analysis of recent market activity up to the middle of July showed changes in the balance of supply and sales, providing an early insight into trends in turnover and whether supply is starting to expand; which could reduce price growth.
Looking at the three months to mid-July, recent sales momentum in regional cities and higher house price growth appears to have held up over the European Union referendum period.
In contrast, the headwinds facing the London market ahead of the vote resulted in rising supply and relatively fewer sales; pointing to slower house price growth in the months ahead.
Richard Donnell, insight director at Hometrack, said headwinds facing the London market in the lead up to the EU referendum have intensified on the back of the vote to leave and are resulting in slower sales rates.
“It is still early days, and seasonal factors also need to be considered, but the growth in new listings and slower sales points to slower price growth in the months ahead,” he commented.
“This growth in supply reflects a mix of new homes filtering through from London’s expanded development pipeline, investors looking to take capital gains, or selling to de-leverage their investments following the reduction in tax relief on mortgage payments for buy-to let investors.”
Hometrack’s view remains that sales volumes are likely to slow and price growth will moderate over the second half of the year.
“The severity of a slowdown will depend upon the response of consumers and businesses to the uncertainty created by the decision to leave the EU and the impact this has on the economy,” added Mr Donnell.
Jeremy Duncombe, director of the Legal & General Mortgage Club, said it was interesting to see 10.2 per cent house price inflation being described as stalling.
“While price growth may be flat, it is still significantly higher than wage inflation. This means that houses are still becoming more expensive in real terms leading to more and more aspiring borrowers finding themselves completely outpriced in the relentlessly competitive housing market.”
