Annual house price growth slows to lowest levels in nearly five years

Annual house price growth slowed to its lowest levels in nearly five years in May, official figures show.

Across the UK, average property values increased by 3% in the year to May, down from 3.5% in April, according to figures released jointly by the Office for National Statistics (ONS), the Land Registry and other bodies.

This marked the lowest annual rate since August 2013 when annual house price growth was also at 3%.

The average UK house price in May was £226,000.

The cooling in UK house price growth is mainly driven by a slowdown in the South and East of England, the report said.

In London, house prices fell by 0.4% annually in May - marking the fourth month in a row of annual declines.

By contrast, the East Midlands was the region with the fastest annual house price growth, at 6.3%.

In England, house prices increased by 2.9% over the year to May, taking the average property value there to £244,000.

Wales saw average house prices increase by 1% over the previous 12 months to stand at £149,000.

In Scotland, the average price increased by 4.9% over the year to reach £149,000.

The average price in Northern Ireland was £130,000, marking an increase of 4.2% over the year.

Richard Snook, senior economist at PwC, said forecasts suggest the average UK house price could rise to around £285,000 by 2025.

He continued: "In our regional forecasts we predict price falls in London in 2018 and 2019 of 1.7% and 0.2% respectively."

Sarah Beeny, founder of estate agent Tepilo.com, said house prices will continue to be held up by "high levels of buyer demand and a shortage of properties coming on to the market".