House prices have grown 1.9 per cent year on year in the three months to May, representing a softening of the market when compared to annual figures, according to the latest Halifax index.
The annual growth in April was found to be 2.2 per cent, however on a monthly basis, prices rose 1.5 per cent in May, partially reversing the 3.1 per cent monthly decline found in April.
On a quarterly basis the May figures were 0.2 per cent higher than in the previous quarter, but both quarterly an annual measures have fallen since reaching a recent peak in the final months of last year, according to Russell Galley, managing director at Halifax.
Mr Galley said: "These latest price changes reflect a relatively subdued UK housing market. After a sharp rise in January, mortgage approvals have softened in the past three months.
"Whilst both newly agreed sales and new buyer enquiries are showing signs of stabilisation [they have] having fallen in recent months."
But he said the continuing strength of the labour market was supporting house prices, with the average house price now standing at £224,439.
In the three months to March the number of full-time employees increased by 202,000, the biggest increase in three years.
Figures from the Bank of England showed the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – were 62,455 in April.
This represents a 0.6 per cent month on month decline, marking the third consecutive month in which approvals have fallen.
In the three months to April approvals were 1.9 per cent lower than in the preceding three months, continuing to indicate a subdued residential market, Halifax said.
UK home sales grew by 4 per cent, from 96,800 in March to 100,190 in April but in the three months to April sales were 1.6 per cent lower than in the preceding three months.
This weakness reflects the sharp slowdown seen in mortgage approvals at the end of last year, according to Halifax.
Steve Seal, director of sales and marketing at Bluestone Mortgages said the slowing rate of house prices was bound to provide some respite to those looking to join the property ladder.
But he warned the financial affordability of some borrowers was still being challenged by the constant rise of the cost of living.
Kevin Roberts, director of Legal & General Mortgage Club, said house prices are rising at more sustainable levels than those of the past, which is good news for many buyers trying to get onto the property ladder.
He said: "Younger buyers are also benefitting from growing support for schemes like shared ownership, which are putting them in a better position than a few years ago.
"However, this isn't to say the housing crisis is over. One in every four housing transactions in this country are still supported by the Bank of Mum and Dad, a generous level of support, but what about those individuals who don't have a Bank of Mum and Dad to rely on?
"We firmly believe the answer for the challenges facing the housing sector is to build more homes. We are still not seeing enough new housing coming onto the market and a boost to housing supply – hundreds of thousands of new homes every year – will certainly provide younger buyers with a much better opportunity to take their first step as a homeowner."
carmen.reichman@ft.com
