UK House Price Inflation Softens In June

(RTTNews) - UK house prices logged a slower growth in June reflecting weaker demand after the increase in stamp duty at the start of April, data from the Nationwide Building Society showed on Tuesday.

House prices advanced 2.1 percent year-on-year in June, slower than the 3.5 percent increase seen in May. House price growth was expected to moderate to 3.3 percent.

Prices fell by more-than-expected 0.8 percent on a monthly basis, in contrast to the 0.4 percent gain in May. Economists had forecast a 0.2 percent fall. This was the biggest fall in more than two years.

"Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive," Nationwide's Chief Economist Robert Gardner said.

Gardner said the jobless rate remains low, earnings are rising at a healthy pace, household balance sheets are strong and borrowing costs are set to moderate a little if the Bank of England lower the interest rates further in the coming quarter.

In the three months to June, house prices decreased 0.5 percent from the previous three months.

The BoE has reduced the benchmark interest rate four times since last August. The previous change was in May, when the rate was lowered by 25 basis points.

Data released this week showed that mortgage approvals increased for the first time so far this year in May. The net mortgage approvals for house purchases rose by more-than-expected 2,400 to 63,000 in May and net borrowing of mortgage debt by individuals rebounded by GBP 2.8 billion to GBP 2.1 billion.