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UK house price growth has slowed as the cost of living squeeze hits households, although prices are still rising much faster than wages over the last year.

Lender Nationwide reports that May saw “a slight slowing” in the rate of annual house price growth. Prices were 11.2% higher than a year ago, down from 12.1% in April.

But prices aren’t actually falling -- they rose 0.9% month-on-month in May, the tenth successive monthly increase, making it harder for first-time buyers to get onto the housing ladder.

Robert Gardner, Nationwide’s Chief Economist, says the housing market has shown a surprising amount of momentum in the face of rising inflation and interest rates.

But a slowdown is looming, he says, as consumer confidence is hit by the cost of living squeeze.

Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, and with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices. “We continue to expect the housing market to slow as the year progresses. Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high. Measures of consumer confidence have already fallen towards record lows. Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.

Yesterday, the Bank of England reported that the number of mortgages approved by UK lenders had dropped to its lowest since June 2020. That could be a sign the housing market was cooling.



Less than 66,000 mortgages were approved in April, down from 69,531 in March and 73,220 back in January.

The latest surveys of purchasing managers at UK and eurozone factories are likely to confirm that growth slowed last month, raising fears that a recession may be close.

The oil price has dropped sharply overnight, on reports that Opec could suspend Russia from their oil production deal. That would allow members such as Saudi Arabia and the United Arab Emirates to produce more oil to meet Opec’s existing production targets.

Transport Secretary Grant Shapps has demanded a meeting with aviation bosses to find out “what’s gone wrong”, as travel chaos deepens across the country.

The International Air Transport Association (Iata) has blamed the half-term gridlock on problems getting clearances for new staff, saying the time taken to approve recruits has more than tripled:

European markets are set to begin June with small gains:

Source: The Guardian

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