Annual house price gains across the UK have slowed for a third month as the weakening economy, cost of living squeeze and rising interest rates started to have an impact on the property market. The average UK house price hit a new record high of £271,613, but there are “tentative signs of a slowdown”, Nationwide building society said. Prices rose 10.7% in the year to June, slowing from May’s annual rate of 11.2%, its monthly house price index showed. Property values were up 0.3% in June from the previous month, a notable slowdown from May’s 0.9% gain, but still the 11th monthly rise in a row. Robert Gardner, Nationwide’s chief economist, said average prices had increased by more than £26,000 in the past year. Gardner added: “There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries. “Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low. Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months.” Gardner said that, at the same time, the stock of homes on the market had remained low, keeping an upward pressure on house prices. “The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with [consumer price] inflation expected to reach double digits towards the end of the year,” he said. “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.” Looking across the UK, Gardner said quarterly figures showed a softening of house price growth in many regions in the three months to June. The south-west of England overtook Wales as the strongest-performing region, with house prices up 14.7% year on year. This was closely followed by East Anglia, where annual price growth remained at 14.2%. London remained the weakest-performing area, with annual price growth slowing to 6%, from 7.4% in the previous quarter. Many experts expect the market to cool in the coming months, and to ease further next year. Gabriella Dickens, a senior UK economist at Pantheon Macroeconomics, said: “We expect house prices to drop by around 2% in the second half of the year, pushing down the year-over-year rate to around 2% by the end of the year.”