The monthly rate of house price inflation eased slightly in June with the price of the average house rising 0.9% in the month, down on the 1.7% rise during May, Nationwide's June house price index reveals.
June's price increase took the annual rate of house price inflation to 19.1% with the price of the average house now standing at £151,524, which is more than double the price at the start of the new millennium.
At the top end of the price growth table are the North and Wales, with prices in both regions increasing by a third over the last twelve months. Nationwide says whilst strong price rises in these regions are partly explained by better than average affordability in terms of the ratio of house prices to earnings, buyer confidence and expectations of further price rises are also likely to be playing a role.
In Scotland the upward surge in house prices continued into the second quarter, with the 24% annual increase taking the price of the average house above £100,000 for the first time. Prices in Northern Ireland also breached the £100,000 mark following a 14% increase for the year. At a local level, the areas seeing prices rise fastest are predominantly in the North and Wales including Hartlepool, Allerdale, Barrow-in-Furness, Gateshead and Sedgefield in the North, and Swansea, Powys and Gwynedd in Wales.
Price growth was once again slowest in some of the more expensive areas of the country including Tower Hamlets, Wycombe, Winchester, Epsom, Windsor and Maidenhead.
Nationwide's forecast for house price inflation in the 12 months to December 2004 remains at 15%. Over the first six months of this year prices have risen by just under 10%, or around 1.5% per month. Underlying its forecast is a considerable slowdown in this pace of growth to an average of 0.75% perm month for the remainder of the year in response to higher interest rates, worsening affordability, reduced demand for buy-to-let and a downgrading of buyers' expectations of future price growth.
Although the combination of rising capital values and declining rental values has put downward pressure on rental yields in all areas, Nationwide does not expect a rapid release of properties on to the market in the event of a change in sentiment and says many buy-to-let investors are likely to remain in the market for the long-term.