U.K. house-price growth cooled in May and the slowdown may continue if home supply increases, Nationwide Building Society said.
Values advanced an annual 4.6 percent, down from 5.2 percent in April, the lender said in a statement on Wednesday. That’s the smallest advance since August 2013. Prices rose 0.3 percent on the month to 195,166 pounds ($300,000).
“Over the longer term we would expect house-price growth to converge with earnings growth, which has typically been around 4 percent per annum,” said Robert Gardner, chief economist of Nationwide. “However, much will depend on supply-side developments -- in recent years the rate of building activity has remained well below that required to keep up with population growth.”
An imbalance between supply and demand has supported prices and prompted groups including the Royal Institution of Chartered Surveyors to warn that Britain faces a housing crisis unless homebuilding is ramped up. Prime Minister David Cameron’s Conservative Party has pledged to build 200,000 “starter homes” for first-time buyers under the age of 40.
U.K. mortgage approvals rose to the highest level in more than a year in April, according to the Bank of England, in a sign the housing market is strengthening.