House prices are past their peak, according to data released by Nationwide, the building society. Prices rose by just 0.5 per cent between October and November, one of the smallest month-on-month increases this year.
Dr Paul Sanderson, head of research at Nationwide, said: "The last two months have seen a distinct slowing in house price increases compared with the strong growth seen over the summer, and this adds weight to our view that house price inflation has probably passed its peak in this cycle".
Between September and October, house prices grew by 0.2 per cent. Over the summer, however, prices were rising by just under 2 per cent each month.
Dr Sanderson attributed the slowdown to slackening consumer demand, and noted there was anecdotal evidence that house buyers, particularly at the top end of the market, were resisting further hikes in prices. He added: "It is also possible that, at least in the London market, what has been going on in Asia has had some impact". Asian buyers snapped up many London properties, particularly in the Docklands area, earlier in the year.
Interest rates are another contributory factor. According to Dr Sanderson, higher rates have dented consumer confidence and there will be no major surge in housing demand until the public believes that rates are at their peak.
The average house price in the UK now stands at pounds 61,879, 11.6 per cent higher than at this time last year. Before accounting for inflation, prices are now close to the peak levels seen in the late 1980s.
In the medium term, Nationwide is optimistic about the outlook for the housing sector, and believes that growth should continue, albeit at a gentle pace, well into next year.
But Dr Sanderson warned that dramatic interest rate hikes could threaten the economy's "soft landing".Reuse content