Another indication of the pricking of Britain's house price bubble has been published today in the form of Nationwide's latest index figures suggesting price rises in June slowed by nearly half on the previous month.
Property prices gained just 0.9% this month compared to a 1.7% rise in May, the lender's quarterly housing review says.
Annual house price inflation dropped to 19.1% from 19.5% over the same period - the first fall recorded in the past three months.
However, the average house price still increased by another £2,000 to £151,524. This is more than double the average price at the start of the new millennium, the Nationwide survey reveals.
Demographically, annualised house price growth picked up in both London and the South East, to 11% and 13% respectively, boosted by the improving job market.
Scotland saw prices rise further in the second quarter of this year as an annual increase of 24% pushed average house prices over the £100,000 mark for the first time.
Alex Bannister, Nationwide group economist, says the pace of house price growth across the country is more even compared with recent quarters, and adds Nationwide's forecast for house price inflation in the 12 months to December 2004 remains at 15%.
"Underlying our forecast is a considerable slowdown in this pace of growth to an average 0.75% per 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," Bannister says.
That said, he still disagrees with Bank of England governor Mervyn King's comments last week, warning house prices may fall in the near future.
Bannister says: "Whilst we would concur with the majority of the governor's comments, we believe that the most likely conclusion to the current housing market cycle is a long drawn out period of slower house price inflation and low housing market activity, as opposed to a slump in prices."
"The current economic outlook remains positive and although rising rates are likely to act as a brake on the market, we do not foresee economic triggers arising that might cause widespread and sustained price falls," he concludes.IFAonline
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