UK house prices fell by 0.4 per cent this month – the worst monthly decline since 2012 – and defying expectations of a return to growth, according to Nationwide.

The average cost of a UK home is now £207,699 according to Nationwide’s monthly index which fell for the second consecutive month to mark its worst run in five years. Prices in April were however still 2.6 per cent higher compared to the same month last year.

Robert Gardner, chief economist at Nationwide, said the figures were “surprising” as unemployment in the UK is at multi-decade lows and mortgage costs remain low. Still, the slowdown points towards a cutback in household spending in a year where inflation is forecast to climb to 3 per cent.

“While monthly figures can be volatile, the recent softening in price growth may be a further indication that households are starting to react to the emerging squeeze on real incomes or to affordability pressures in key parts of the country”, said Mr Gardner.

Chart via Bloomberg

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