Hometrack's Monthly National Housing Survey suggest that the days of rapidly accelerating house prices could be over, as the rate of growth slackened to 0.6 per cent in May, from 0.7 per cent in April...

The year-on-year rate of growth also slowed down slightly, from 6.8 per cent in April to 6.7 per cent in May. This left the average house price in May at £175,600.

The market's anticipation of the May interest rate increase appears to have had some bearing on the figures, as the number of new buyers registering with agents remained unchanged.

Likewise, the number of property transactions grew by just 4.3 per cent, substantially lower than April's rate of 9.6 per cent.

Increase in Supply

HIPS (Home Information Packs) also left their mark, despite being recalled until August, as a spate of new properties were put on the market to avoid the initial June 1st deadline.

This equated to a six per cent increase in new stock during May, compared to 5.7 per cent in April and only 4.7 per cent in March.

However, Hometrack notes that the influx of new properties was largely confined to London and the South East, where strong market conditions attracted vendors looking to achieve high asking prices.

London alone recorded an 8.8 per cent increase in new property over May, with a two month total of 14.5 per cent.  The same period last year achieved a rise of just 1.3 per cent rise in new stock.

Richard Donnell, Hometrack's Director of Research wonders whether vendors are wise to cash in now with a market that may be poised for a turnaround. He comments:

"This increase comes at a time when there are signs of wavering demand in the face of higher interest rates. And it raises the question as to just how saleable these properties will prove to be.

"Despite a 1.3 per cent increase in values across London over May, the year-on-year rate of growth remained unchanged at 14.3 per cent and we expect this to slow further over the final six months of the year."

Prices Ease Regionally

Price growth remained far lower outside the Capital, even in the traditionally strong South East market, where a surplus in supply led to price growth dropping from 0.9 per cent in April to 0.6 per cent in May.

East Anglia also suffered a 0.3 per cent drop in price growth, falling from 0.6 per cent in April.

Things looked more grim further north as prices in the North West merely clung on, while the North experienced a modest 0.1 per cent increase.

Slowdown Will Speed Up

Hometrack takes these figures as a sign of things to come, as Donnell comments: "The steady ratcheting up of interest rates was bound to take its toll eventually.

"We expect the headline rate of growth to slow relatively quickly over the rest of the year towards four per cent as affordability pressures put a continued squeeze on purchasing power and more supply comes to the market.

"The expected slowdown will be exacerbated by any further increases in interest rates above the current 5.5 per cent."