House price growth has reached its slowest pace in four years as rising inflation puts pressure on consumer finances.
Prices in the three months to June rose by 2.6 per cent on an annual basis – the slowest increase since May 2013, according to the latest Halifax house price index.
On a quarterly basis, prices declined by 0.1 per cent - the first time such a trend has been witnessed since November 2012 - to reach an average of £218,390.
The decline was 1 per cent month-on-month, contradicting recent data from Nationwide indicating prices climbed by 1.1 per cent during the month.
But Halifax pointed out that, despite the drop, prices remain 2.6 per cent higher than the first quarter of 2016 and 9 per cent above their August 2007 peak.
Halifax housing economist Martin Ellis said: “Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages.
"This, combined with the new stamp duty on buy-to-let and second homes in 2016, appears to have weakened housing demand in recent months.
“A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale should help continue to underpin house prices over the coming months.”
There was better news on the first-time buyer (FTB) front, with the number of those taking their first step on the property ladder reaching an estimated 162,704 in the first half of 2017 - only 15 per cent below their peak in 2006, according to the latest Halifax data.
It is the third time in four years that the number of first-time buyers has exceeded 150,000.
Jonathan Hopper, managing director of Garrington Property Finders, said: “Many in the industry had hoped that once the chilling effect of the election was past, the traditional spring surge in activity would kick in. But on this evidence the bounce has been cancelled rather than delayed.
“The most likely culprit is the yawning gulf between house price growth and wage growth.
“As consumer inflation accelerates, real wages are falling faster and making home ownership for would-be buyers more of a stretch. Mortgage rates may still be at rock bottom but the number of first-time buyers being stymied by affordability is steadily creeping up.”
simon.allin@ft.com
