U.K. house prices fell the most in nine months in June as the market continued a “gradual” slowdown, Nationwide Building Society said.
Values declined 0.2 percent to an average 195,055 pounds ($304,500), the lender said in a statement on Thursday. The annual pace of growth slowed to 3.3 percent, the least in two years, from 4.6 percent.
“This maintains the gradual downward trend that has been in evidence since mid-2014,” said Nationwide Chief Economist Robert Gardner. “Price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth.”
Record-low borrowing costs are helping to drive demand for property in the U.K., while a shortage of housing is fueling continued gains in prices. Bank of England Governor Mark Carney said on Wednesday he’s maintaining measures introduced a year ago aimed at restricting riskier mortgage borrowing because of the momentum in the housing market.
The central bank said earlier this month that banks approved 64,434 mortgages in May. That compared with 67,580 in April, which was the highest level in 14 months.
A separate report from Markit Economics on Thursday showed growth in construction accelerated in June as commercial and civil engineering work registered a “sharp upturn.” While homebuilding eased, it was the fastest growing area of construction activity.
Markit’s headline index for the industry rose to 58.1 from 55.9 in May, above the 50 level that indicates expansion. June’s reading was the strongest since February