Nationwide: House price growth almost stops

House price growth almost stopped in July rising just 0.1 per cent, research out today reveals.

Nationwide's house price index reveals house prices were up by £200 over this month, bringing the average UK property to £184,270.

Compared with the same time last year house prices are up 9.9 per cent, down from the 11.1 per cent recorded from June 2006 to June 2007.

July's 0.1 per cent rise is the smallest since April 2006, Nationwide notes.

"After surprisingly picking up steam in June, house prices were almost unchanged in July, and their underlying trend growth resumed a downward path," commented Fionnuala Earley, Nationwide chief economist.

She added: "The sharp slowdown in July's house price numbers could show that potential homebuyers are thinking twice about overstretching themselves in a higher interest rate environment."

Commenting on the government's housing green paper announced in parliament this week, Ms Earley said it was "a step in the right direction".

However, she added the proposals were no "quick fix".

Ms Earley concluded: "The current level of housing completions is 38,000 units behind the projected annual level of household formation. This implies that merely keeping the housing shortfall from deteriorating further will require a large step increase in the number of completions.

"Relieving supply-side pressures on house prices will therefore be a gradual process, with more significant effects in the medium to long term than in the immediate future. In addition, with limited land supplies available, careful choices need to be made about where to locate new homes. The recent floods are testimony to this and highlight the challenges to increasing the housing supply."