House price growth slowed in June

House price growth slowed in the year to June to the lowest annual figure for 11 months, official statistics show.

Land registry data published today showed prices increased 7.8% in 12 months to June, down from the 12.8% reported for the year to May. 

The drop in growth means general inflation in the UK economy has now overtaken house price growth. In the year to June, the consumer price index (CPI) measure of inflation increased 10.1%, while the consumer price index housing (CPIH) measure rose 8.8%.

If growth slows significantly relative to build cost inflation it would mean housebuilders would be less easily able to offset rising materials and labour costs with rising house prices. In the past few weeks major housebuilders including Persimmon, Taylor Wimpey and Cala have reported that costs have been totally or largely cancelled out by soaring sales prices.

Despite the housing market slowing, estate agents said this did not indicate it was about to crash. 

Marc von Grundherr, director of London estate agents Benham and Reeves, said: “It’s inevitable that the property market was eventually going to slow from the high rate of knots it’s been moving at throughout the pandemic, but we’re yet to see any signs of it sinking and this is likely to remain the case.” 

James Forrester, managing director of agents Barrows and Forrester, said: “While both the monthly and annual rate of house price growth may have slowed quite considerably, the property market continues to march forward in fine form despite the fact that the rest of the economy is crumbling.”

Chris Hodgkinson, managing director of consultancy House Buyer Bureau, predicted “uncertainty” for the market as the UK economy contracts and inflation, which was today revealed went up to 10.1 year-on-year last month, goes up.  

“While the property market has stood firm so far, we can expect a far greater level of uncertainty, coupled with hesitations on both the side of buyers and sellers, to cultivate a much less settled outlook over the coming months,” Hodgkinson said. 

Prices increased 1% between May and June, down on the 5.7% recorded for the same period last year.

The Land Registry figures showed the East of England had the greatest property price increase was in the East of England, going up 9.7% from June last year to June this year. 

In the North East house price growth was the slowest, at 3.6% annually. The average price for a new build home in June 2022 was £404,587 and for an existing resold property £291,692.