House prices rise 0.3%
Updated on 07 June 2007
House prices rose by 0.3% in May - representing the smallest monthly gain of the year so far.
Halifax said higher interest rates had contributed to a cooling of the market, with the monthly growth rate slowing for a third consecutive time.
Annual house price inflation ebbed further away from a high of 11.1% in March, but remained stubbornly above the 10% mark.
Year-on-year change of 10.6% means the average price of a UK home has risen by almost £19,000 over the last 12 months and now stands at £196,893.
The UK's largest lender said solid economic conditions and high employment has continued to support housing demand.
Nonetheless, buyer interest in properties fell for a fifth consecutive month in April and the pace of decline is increasing.
Mortgage approvals to fund house purchases has fallen to the lowest level for 12 months in a further indication that some of the heat is coming out of the market.
Looking ahead, Halifax said higher interest rates and a negative trend in real earnings growth are likely to cause house price inflation to moderate further throughout 2007.
Wage settlements continue to lag behind retail price inflation, while four base rate hikes since August have made mortgages less affordable for would-be buyers.
Martin Ellis, chief economist at Halifax, said: "Higher interest rates, the negative trend in real earnings growth and rising food prices are likely to bite increasingly on householders' finances over the coming months, curbing housing demand."
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