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UK house prices slipped unexpectedly in June, the biggest single decline in nine months, as the market continued a “gradual” slowdown, Nationwide Building Society said on Thursday.

Prices fell 0.2 per cent last month — well below economists’ forecasts of a 0.2 per cent rise — pushing the annual rate of growth to a two-year low of 3.3 per cent from 4.6 per cent in May. At this time last year, prices were growing at 11.8 per cent.

The mortgage lender said the average house price in the UK was now £195,055.

“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 pick-up in annual wage growth.”

Northern Ireland saw the fastest rate of growth, with prices rising 8 per cent year on year, followed by London, which saw growth of over 7 per cent.

The slowdown is not confined to, nor does it appear to be driven primarily by, developments in London, added Mr Gardner.

“In quarter-on-quarter terms, London has continued to see price growth at or above the rate in the UK overall over the past three quarters, while the annual rate of price growth in the capital remains the second highest in the country.”

The slowdown contradicts evidence from many property developers, such as Bellway and Persimmon, which have seen strong growth in the volume and price of orders.

Record-low UK borrowing costs have been boosting demand, while the nation’s housing shortage has shored up prices. Howard Archer, chief UK economist of IHS Global Insight, said that while the June dip was “surprising” it did not fundamentally change his view that house prices would be firmer over the second half of the year.

“Consequently, we maintain the view that house prices will rise by 6 per cent over 2015. We currently see house prices rising by around 5 per cent in 2016,” he said

Alex Gosling, chief executive of estate agent HouseSimple.com, noted that April and May held an unusually high level of buyer activity and that the summer months are often slower months for property purchases.

“What we’re seeing overall is a return to normality, although a black cloud does loom overhead in the form of a shortage of stock. The lack of properties coming on to the market remains an issue, and come September when buying activity typically starts to pick up again, the picture could be an entirely different one.”

Mark Carney, Bank of England governor, said this week that he would continue with measures introduced last year designed to minimise riskier mortgage borrowing because of the current structure of the housing market.

This week the Bank of England said banks approved 64,434 mortgages in May, compared with 67,580 in April, the highest level in 14 months.

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