According to figures from Nationwide, house prices increased by an annual rate of 2.1 per cent last month, but this was down from the 2.4 per cent growth rate recorded back in April, and 3.5 per cent in March.
Last month’s 2.1 per cent figure is also the weakest level of growth seen in almost four years.
This means the average house price was valued at £208,711 last month, up slightly from the £207,699 posted back in April.
Robert Gardner, Nationwide's chief economist, said: “It is still early days, but this provides further evidence that the housing market is losing momentum.”
He suggested this might be indicative of a “wider slowdown in the household sector”, but said data continues to send mixed signals in this regard.
The housing market could also be affected by the pick-up in inflation, which puts pressure on incomes and people's buying potential.
Long term steady growth is far healthier than the significant increases of recent years. Rob WeaverBut Mr Gardner disputed whether next week’s general election was having an impact on house prices, adding: “Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”
But he said activity slowed in the period immediately after the EU referendum, which was the continuation of a trend driven by the changes to stamp duty tax on second homes earlier in the year.
“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.”
But the Nationwide economist was confident that the shortage of properties on the market will support prices, and predicted a small increase in house prices of around 2 per cent over the course of 2017.
Rob Weaver, director of investments at property investment marketplace Property Partner, said: “Against a backdrop of macroeconomic uncertainty, and with a snap election, it's no surprise the housing market is in cool-down mode."
Mr Weaver said many will have adopted a ‘wait and see’ approach, which means the usual summer slowdown in the property market has started early.
“We favour a steady market, and we have been saying this for a long time now. Long term steady growth is far healthier than the significant increases of recent years."
But the investments boss warned people against reacting to short-term movements, adding: "There are no signs that house prices are set to fall sharply; the jobs market is too strong, mortgages are phenomenally cheap and lack of supply nationally is still a major hurdle."
He said the slowdown could present opportunities for investors and could produce greater negotiating power for first-time buyers.
katherine.denham@ft.com
