House prices in Britain rebounded in June, bringing a three-month decline to an end, and momentarily cooling concerns the squeeze on household budgets was impacting the property market.
According to data released by Nationwide on Wednesday (28 June), the average price of a home rose 1.1% month-on-month to £211,301, marking the first increase following a fall in house prices from March to May.
However, Nationwide warned monthly growth rates can be volatile, even after accounting for seasonal effects. The annual rate of house price growth, which gives a better sense of the underlying trend, edged up to 3.1% from 2.1% in May and is now within the 3% to 6% range that has been on record for the most part since early 2015.
House prices in London, meanwhile, recorded the slowest rate of growth since 2012, edging up 1.2% year-on-year, the second slowest pace of the 13 UK regions. In the second quarter, the gap between the strongest performing region - East Anglia, which saw 5% annual growth - and the weakest - the North, which recorded 1% growth - was the smallest on record since 1974.
"There has been a shift in regional house price trends," said Nationwide economist Robert Gardner.
"Price growth in the South of England has moderated, converging with the rates prevailing in the rest of the country. Nevertheless, when viewed in levels, the price gap between regions remains extremely wide. "
Gardner added it remained unclear whether the increase in house price growth in June reflected strengthening demand conditions thanks to ongoing low mortgage rates, or whether the lack of homes on the market was the more important factor.
While data indicates the number of new buyer enquiries has fallen, it also indicates that this has been matched by a decline in new instructions and the number of properties on estate agents' books remains close to all-time lows.
The ongoing uncertainties surrounding Britain's post-Brexit future means the country's economic outlook remains shrouded in doubts and housing market trends will depend crucially on developments in the wider economy.
"Nevertheless, in our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation squeezes household budgets," added Gardner.
"This, together with ongoing housing affordability pressures in key parts of the country, is likely to exert a drag on housing market activity and house price growth in the quarters ahead."