House prices made a strong recovery in June, increasing by 1.1% during the month, reveals Nationwide...

Prices increasing more than twice as fast as last year, at the equivalent of a profitable £50 a day.  Despite the rise, the rate of growth is set to slow in second half of year, with nationwide forecasting overall growth of 5.8% in 2007

Nationwide also expressed reservations about Gordon Brown’s increased focus on housing, urging the new Prime Minister to carefull consider the implications of any changes to buy-to-let taxation.

Commenting on the figures, Fionnuala Earley, Nationwide's Chief Economist, said:

“While June’s heavy rain dampened the first days of Wimbledon, it did little to check the vigour of the housing market as house price inflation bounced back during the month. House prices increased by a stronger than expected 1.1% in June - the fastest monthly increase in 2007.

“The pick up during the month brings the annual rate of house price inflation to 11.1%, its highest level since January 2005 and more than twice as fast as the pace of growth at this time last year.

”The price of a typical house is now £184,070, more than £18,000 higher than this time last year, which is the equivalent of a rise of more than £50 per day."

Market set for 'significant cooling'

Warren Bright, Chief Executive of Propertyfinder.com observed:

“Today’s data is further reassurance that the property market is still in remarkable health despite four rate rises in recent months. The recent signs that the rate of growth was slowing were to be expected – it is difficult for any market to sustain double digit price growth over the long term.  What is happening now is that the market is simply settling back to a more realistic level of growth underpinned by continued strong demand.”

David Bexon, Managing Director, SmartNewHomes.com said:

“While average house prices have recorded positive price growth in June, and May has recorded the highest average price for a new home, consumers should not be fooled into thinking that prices will continue to rise at their current pace. The imminent threat of another rate rise in July is likely to result in a significant cooling of the market over the coming months.”

The Bank of England's (BoE) Monetary Policy Committee will decide next week whether another rise in UK interest is warranted.

Source: Nationwide