Yearly house price growth rose to 11% in the year to July, bringing typical prices up to £271,209.
This represents an uptick from 10.7% in June, while on a monthly basis prices rose by 0.1% – the 12th consecutive monthly increase.
Robert Gardner, chief economist at Nationwide, which produced the house price index, said there are early signs that activity is slowing down.
He said: “We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year.
“Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.”
Mortgage approvals dipped in June, but that’s yet to feed into house price growth.
Mark Harris, chief executive of mortgage broker SPF Private Clients, reckons rising mortgage rates has contributed to the continued demand for property.
He said: “Housing prices continue to edge upwards, due to lack of stock, although some of the heat has come out of the market.
“Borrowers remain extremely keen to secure a fixed-rate mortgage before rates rise higher.With another rate rise on the cards as early as later this week, minds are focused on getting deals done before the cost of borrowing inevitably rises further still.
“Buy-to-let purchases are also on the rise as investors look for an alternative to stock market volatility for their investments, encouraged by higher rents.”
Tomer Aboody, director of property lender MT Finance, agreed that higher rents are spurring on investors.
Office for National Statistics data show that UK rents increased by 3.0% in June year-on-year, though clearly this is dwarfed by house price growth.
He said: “It is interesting to see buy-to-let purchases on the rise, as investors take advantage of higher rents, particularly when compared with relatively low returns on bank deposits.
“A slowdown is coming, due to inflation and higher interest rates, but this is likely to be very gradual.”
Aboody added: “The slowdown in home movers again suggests that stamp duty needs to be looked at and possibly reviewed, as fewer sellers are looking to move due to high transactional costs.”
Geoff Garrett, director of broker Henry Dannell, said it’s inevitable that higher house prices will eventually drive down activity.
He said: “A combination of rising mortgage rates, inflation and the increased cost of living have already started to cool the property market where buyer appetites in the form of mortgage approvals are concerned.
“Although this is yet to filter through to topline house price growth, it’s inevitable that these headwinds will eventually impact the price buyers are willing to pay.”
However Rose Lyle, director of private clients at property consultants INHOUS, which focuses on high net worth individuals, reports strong activity on the ground.
She said: “We are still seeing very strong demand for good family houses in decent gardens in school catchment areas. Despite stock levels freeing up a little, there is more than one buyer for each house, with competitive bidding on several transactions.
“The autumn market is likely to be strong, despite rising interest rates and worries over the economy. There are plenty of buyers with cash available and, with inflation at the level it is, leaving that money in a bank account does not make sound sense.”