The average UK house price rose 0.2 per cent in May to £204,368, according to the latest Nationwide house price index.
The average house price in the year to 31 May rose 4.7 per cent, down 20 basis points on June’s 4.9 per cent.
Nationwide chief economist Robert Gardner says: “The annual pace of house price growth remains in the fairly narrow range between 3 per cent and 5 per cent that has been prevailing for much of the past twelve months.
“In the near term,it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 1 April.
“Indeed, the number of residential property transactions surged to an all-time high in March, some 11 per cent higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities.”
Gardner adds that buy-to-let was a big driver of the increase, but that buying second homes was also a “substantial proportion”.
He says that house purchase rates are likely to fall in the coming months as many buyers brought their transactions forward.
He says: “Nevertheless, healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track.
“However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead.”
Legal & General Mortgage Club director Jeremy Duncombe says: “Once again, house prices are rising at a seemingly unstoppable rate. Whilst many homeowners may be enjoying these perpetual increases in property value, for the overall health of the market, this is far from good news.
“A generation of aspiring homeowners are increasingly finding themselves priced out of the market, with property prices rising over four times faster than wages in some areas of the UK.”
Dragonfly Property Finance managing director Mark Posniak says: “In recent days and weeks there has been growing talk of the next house price crash, and against this backdrop the Nationwide’s latest index is surprisingly upbeat.
“At 0.2 per cent, house price growth in May was negligible but the broader prognosis given by the Nationwide, specifically that the market could favour sellers, is out of sync with the doom-mongering of various property market commentators.”
Former RICS chairman and London estate agent Jeremy Leaf says: “The latest figures from Nationwide are quite encouraging in a way because the slowdown in price growth is not as bad a comedown as one might expect following the rush from landlords and second homebuyers to beat the stamp duty hike.
“The figures are also indicative of a relatively strong underlying market. Other buyers were, and still are, just as active as some of the investors in the period leading up to the change in stamp duty rates. This is reflecting what is happening on the ground where some vendors are reducing prices in order to get properties sold because there is less demand.”