The monthly rate of house price inflation slipped in June to 0.9% from last month's seasonally adjusted figure of 1.7%, according to the Nationwide building society today.

The figures are further evidence of a property market slowdown coming a day after Hometrack said house price growth slowed by 0.6% from last month.

Prices grew by 19.1% in the year to June, compared with 19.5% in the year to May, the data showed. The average house now costs £151,524 against £149,020 in May - more than double the price at the start of the new Millennium, said Nationwide.

Nationwide, who issued both monthly and quarterly reports today, still forecast that house price inflation for 2004 remains at 15%.

Monthly index - Headlines June 2004	June	May
UK All Properties Index* (Q1 1993=100)	298.1	295.6
Monthly change*	0.9%	1.7%
Annual change	19.1%	19.5%
Average price	£151,524	£149,020

Quarterly index - Headlines	Q2 2004	Q1 2004	Q4 2003	Q3 2003
UK All Properties Index* (Q1 1993=100)	297.1	282.3	268.4	256.8
Quarterly change*	5.3%	5.2%	4.5%	3.2%
Annual change	19.4%	16.9%	15.5%	17.1%
Average price in quarter	£149,742	£140,225	£133,903	£129,761
*Seasonally adjusted

Commenting on the figures Alex Bannister, Nationwide's Group Economist said: "Compared with recent quarters, the pace of house price growth across the country is now more even; with the annual rate of inflation picking up in London (up to 11% year-on-year from 6% last quarter) and the South-East (up to 13% year-on-year from 10% last quarter).”

“The pick up in price growth in the capital and the Home Counties partly reflects an improving jobs market. At the top end of the price growth table are the North and Wales, with prices in both regions increasing by a third over the last twelve months. Whilst strong price rises in these regions are partly explained by better than average affordability in terms of the ratio of house prices to earnings, buyer confidence and expectations of further price rises are also likely to be playing a role.”

"In Scotland, the upward surge in house prices continued into the second quarter, with the 24% annual increase taking the price of the average house above £100,000 for the first time. Prices in Northern Ireland also breached the £100,000 mark following a 14% increase for the year. At a local level, the areas seeing prices rise fastest are predominantly in the North and Wales - including Hartlepool, Allerdale, Barrow-in-Furness, Gateshead and Sedgefield in the North, and Swansea, Powys and Gwynedd in Wales.”

“Price growth was once again slowest in some of the more expensive areas of the country including Tower Hamlets, Wycombe, Winchester, Epsom, Windsor and Maidenhead.”

"Our forecast for house price inflation in the 12 months to December 2004 remains at 15%. Over the first six months of this year prices have risen by just under 10%, or around 1.5% per month. Underlying our forecast is a considerable slowdown in this pace of growth to an average of 0.75% per month for the remainder of the year in response to higher interest rates, worsening affordability, reduced demand for buy-to-let and a downgrading of buyers' expectations of future price growth.”

“Although the combination of rising capital values and declining rental values has put downward pressure on rental yields in all areas, we do not expect a rapid release of properties on to the market in the event of a change in sentiment. Many buy-to-let investors are likely to remain in the market for the long-term.”

Speaking about the recent ‘possible slump’ warnings from Mervyn King, the Bank of England’s governor, Alex Bannister said, "Buyer confidence and expectations are undoubtedly playing a significant role in the current cycle. Although the way in which buyers form their expectations about future price growth is complex, the governor's comments are likely to have led to a downgrading of expectations.”

"Whilst we would concur with the majority of the governor's comments, we believe that the most likely conclusion to the current housing market cycle is a long drawn out period of slower house price inflation and low housing market activity, as opposed to a slump in prices. Buyers assuming that 5-10% annual house price growth will be the norm over the coming years are very likely to be disappointed. It is possible that certain areas of the country will see no growth in prices over the coming years.”

"Nevertheless a repeat of the late eighties slump in prices looks unlikely. Although Mervyn King's comments may knock confidence, whilst the economic fundamentals remain positive we would expect this to result in a slowdown in price growth as opposed to widespread falls.”