Average house price rises to £207,699 amid weakest growth since June 2016

House prices have dipped on a month-on-month basis for two months in a row

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House prices recorded their slowest annual increase in nearly four years in April, Nationwide Building Society has reported.

The 2.6% year-on-year increase marked the weakest growth rate since June 2016 and took the average UK house price to £207,699.

House prices have dipped on a month-on-month basis for two months in a row, with a 0.4% fall in April following a 0.3% decrease in March.

Nationwide's chief economist,Robert Gardner, said that while monthly figures can be volatile, the recent softening in price growth may be a sign that households "are starting to react to the emerging squeeze on real incomes or to affordability pressures in key parts of the country".

He said: "It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country.

"Given the ongoing uncertainties around the UK's future trading arrangements and the upcoming election, the economic outlook is unusually uncertain, and housing market trends will depend crucially on developments in the wider economy."

He said that, in his view, household spending is likely to slow in the coming months, and this, combined with mounting affordability pressures, is likely to exert a drag on market activity and house price growth.

Mr Gardner continued: "However, the subdued level of building activity and the shortage of properties on the market are likely to provide support for prices. As a result, we continue to believe that a small increase in house prices of around 2% is likely over the course of 2017 as a whole."

He said there may also be more fundamental reasons for the slowdown - with house price growth having outstripped earnings growth for a sustained period of time, steadily eroding affordability.

For example, he said, the typical house price is currently 6.1 times average earnings, well above the long-term average of 4.3 times earnings, and close to an all-time high of 6.4 times recorded in 2007.

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