Annual house price growth slowed in June, dropping to 10.7% from 11.2% in May, according to the latest Nationwide House Price Index.

House prices climbed by 0.3% on monthly basis in June, which compared to a 0.9% in May, although this still represented the eleventh consecutive monthly rise.

The price of the average UK home has now climbed to a new record high of £271,613, with average prices increasing by over £26,000 over the past year.

Nationwide suggested there are “tentative signs of a slowdown” in the housing market, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries.

Commenting on the figures, Nationwide chief economist, Robert Gardner, said the market had still managed to retain “a surprising amount of momentum”, given the impact on household budgets from high inflation.

“Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months. Furthermore, the unemployment rate remains close to 50-year lows,” Gardner said.

“At the same time, the stock of homes on the market has remained low, which has helped to keep upward pressure on house prices.

“The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year. 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.”

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