Annual house price growth slowed slightly during May, falling back to 11.2% from 12.1% in April, the latest Nationwide House Price Index has indicated.

Nationwide’s data still showed that prices were up on a monthly basis by 0.9%, with May now making the tenth consecutive month to see an increase.

The figures have taken the average house price in the UK to £269,914, an increase of £2,294 since April.

Commenting on the figures, Nationwide chief economist, Robert Gardner, said that the housing market maintained a “surprising” momentum in May.

“Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising amount of momentum,” said Gardner.

“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, and with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.

“We continue to expect the housing market to slow as the year progresses. Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high.”

Senior personal finance analyst at Hargreaves Lansdown, Sarah Coles, added: “The impact of rising prices is gradually taking a toll, and while the jobs market continues to support buyers, wages are falling behind inflation, which will feed into just how much people can afford to spend on a property.

“We also know that mortgage companies are factoring in higher costs to affordability calculations, which will make it harder to borrow, and that more of their valuers are down-valuing properties, because they don’t think they’re worth what buyers are prepared to pay.

“We’re not expecting a blight to strike the market, because right now, demand is still outstripping supply, which is likely to keep prices from falling. However, over the coming months, we’re likely to see buyers take their time, exercise a bit more caution, and house price rises to slow significantly.”

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