On a quarterly basis prices are 2.3% higher in the three months to June compared to Q1 2014.
Stephen Noakes, mortgages director at The Halifax, said: “Housing demand continues to be supported by an economic recovery that is gathering pace, with employment levels growing and rising consumer confidence, although real earnings growth remains sluggish.”
House prices fell by 0.6% in June however, the first time they have dropped in six months.
However Andy Hatoum, co-founder of the property search engine Placebuzz.com, said: “If ever there was an illustration of the pinch of salt with which month-on-month house price figures should be taken, this is it.
“After runaway month-on-month growth of 4% in May, June’s slight drop would seem like a sudden reversal.
“But in reality it’s a case of the market pausing for breath. As prices begin to top out in some areas, such volatility is inevitable.
“Make no mistake though, the overall direction of travel remains skyward. There is still plenty of momentum in much of the country – especially in those areas where the boom took longer to get going.”
Home sales decreased by 3% in May to below 100,000 for the first time in six months, yet transactions were still 15% higher than the same month in 2013.
Jonathan Samuels, chief executive of Dragonfly Property Finance, felt the housing market is hitting a plateau.
He said: “The momentum in the property market is still there. But how long will it last?
“I would expect house prices overall to flatten off during the rest of the year. In certain areas of the country, especially London and the South East, this is surely a good thing.
“With interest rate rises now very much on the cards, mortgage approvals dropping and wage growth still negligible, the property market looks set to plateau in the near term.
“As ever, prices in some areas of the UK are such that buyers need to be vigilant. This market could catch the unwary out.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed.
He said: “With estate agents reporting that applicant levels are falling, fewer sealed bids and packed open houses, some moderation is returning to the market.
“As more property comes up for sale, with vendors worrying that they may have missed the boat, the heat has come out of the housing market.
“The threat of an interest rate rise is there in the background, influencing people's willingness to take on more debt.
“The Mortgage Market Review is having an impact and slowing things down although we expect this to be temporary as lenders get to grips with the new regime.”
