House price inflation slowed sharply to 0.1% in April, from 1.1% in March the Nationwide Building Society said this morning. The annual rate of house price growth fell back below 5% in April to 4.8%.

However, the underlying picture remains reasonably healthy and the sharp fall this month was not a surprise. "The cooling in prices in April was not unexpected given the surge in March," said Nationwide's group economist Fionnuala Earley.

The price of a typical house in the UK is now £163,573, almost £7,500 more than at this time last year. This is equivalent to a price increase of just over £20 per day over the last twelve months.

Headlines	April 2006	March 2006
Monthly index * Q1 '93 = 100	325.0	324.5
Monthly change*	0.1%	1.1%
Annual change	4.8%	5.3%
Average price	£163,573	£162,083
* seasonally adjusted

Fionnuala Earley, Nationwide's group economist, said the results showed the wisdom of not placing too much emphasis on one month’s set of numbers. "The underlying picture remains reasonably healthy as demand conditions have remained quite firm," she said. "While the number of house purchase approvals fell back sharply in February, from 121,000 to 115,000, this remains a buoyant level of activity, well above the ten year average of about 100,000 per month."

On the supply side, estate agents are reporting some increased levels of supply on their books as new sellers come to market – perhaps encouraged by the recent upturn in prices.

But supply is still at a relatively low level and in spite of strong buyer interest, this, coupled with higher house prices choking off some demand, suggests that activity will fall towards its longer term average over the coming months.

Fionnuala Earley commented: "Looking forward, we continue to expect some month to month volatility in the house price numbers as the market settles down after the unseasonably strong winter months and adjusts to the economic conditions on the horizon."

"While we do not expect any early move in interest rates that would stimulate or dampen the market, there are other economic factors that will affect it through their impact on disposable income and confidence."