House prices fell by 0.2 per cent in June, while the annual rate of growth slipped to its lowest rate since July 1996, according to figures released by Nationwide, the UK's largest building society.
In May, prices rose by 0.3 per cent. Compared with a year earlier, prices were ahead just 4.1 per cent, compared with a 5.5 per cent jump in May. The price of an average house now stands at £157,791, compared with £157,272 last month.
Recent evidence has suggested that the housing market could be picking up again, with mortgage lending data from the Bank of England on Wednesday showing a much stronger-than-expected rise.
However this survey is likely to reignite fears that the housing market is still stagnating, and will encourage speculation that the BoE will cut interest rates sooner rather than later.
In the second quarter, prices rose by 1.2 per cent from the previous three-month period, Nationwide said.
This is stronger growth than the last two quarters, but is not an indication that the market is picking up, rather it reflects the strength of the market in April due to an early Easter, it said.
The annual rate of growth, however, slipped to 6.1 per cent in the second quarter from 9.9 per cent last quarter and 19.4 per cent in the same quarter last year. This marks the slowest annual rate of growth since the third quarter of 1996.
The annual rate of house price growth was strongest in Scotland and Northern Ireland in the second quarter, while London and the Southeast now have the slowest rates in the UK.
Scotland and Northern Ireland are now the only areas in the UK where annual house price growth remains in double digits, in contrast to the first quarter when eight out of the thirteen regions recorded inflation above ten per cent. Nationwide said the latest data would not lead it to revise its housing market forecasts for 2005 and it still considers that house price growth will decelerate throughout the year.
West Midlands house prices are now rising at 6.1 per cent against 11 per cent in the first quarter. The average house price is now £152,671.