House prices climb 11.2% but growth slows

Property values increased by 11.2% in the year to the end of May, according to Nationwide, taking the average to £269,914. The increase marks a slowdown on the 12.1% growth recorded in April. Prices also increased by 0.9% month-on-month in May. Robert Gardner of Nationwide expects the housing market to slow as the year progresses, saying: “Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high. Measures of consumer confidence have already fallen towards record lows.” Highlighting the Queen's platinum jubilee, Mr Gardner added: "It is also 70 years since we produced our first house price data. The housing market was very different back in 1952, with just 32% of households owning their own home, compared to 65% today. The UK average house price in 1952 was £1,891 - which is around £62,000 in today's money. This means that current average house prices are 4.3 times higher than 1952 levels in real terms. In 1952 the typical house cost four times average annual earnings, but today the average home costs 6.9 times earnings - a record high. However, borrowing costs were higher back then, with bank rate at 4.0%, compared to 1.0% currently."

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