House price growth cooled in August amid early signs of the housing market losing momentum amid soaring inflation and energy costs, the Nationwide said.
Annual growth slowed to 10 percent in August, down from 11 percent in July, according to the lender’s latest house price index.
However, prices were up 0.8 percent month-on-month, marking the 13th month in a row that average prices have risen.
And the average three bed semi is now valued at £273,751 – £50,000 more than two years ago and up £2,000 in a month.
Demand for homes is outstripping the supply coming up for sale and that is bolstering asking prices, according to Iain McKenzie, chief executive of The Guild of Property Professionals.
He said: “This is the 13th monthly rise in a row, with prices kept sky-high by limited housing supply on the market.”
“The signs of a slowdown are growing however with activity levels falling at the same time as new mortgage approvals drop.”
“First-time buyers though, many still priced out of the market and hoping to get on the ladder, will have their fingers crossed that prices soften to allow them to take that first step.”
The Nationwide also warned that an increase in energy costs coupled with mortgage interest rates rising is going to put household budgets under pressure in the coming months.
It found that the least energy efficient property could typically see bills surge by £2,700 a year, or £225 a month.
This comes as analysts predict the Bank of England will further hike up interest rates from the current 1.75 percent base rate.
This is set to push up mortgage repayments for homeowners not tied to a fixed rate or who have come to the end of their mortgage term and are looking to refinance.
Last week, property portal Zoopla said first-time buyers would need to earn an extra £12,250 on average to afford a home as mortgage rates climb this year.
Robert Gardner, Nationwide’s chief economist, said: “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer inquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels.”
“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set to remain in double digits into next year.”
“Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months.”