UK house prices bounce back in June but London weak - Nationwide

By Andy Bruce LONDON (Reuters) - British house prices rebounded in June after three months of falls, data from mortgage lender Nationwide showed on Wednesday, bucking other signs of housing market weakness, even as prices in London suffered their steepest quarterly drop since 2010. House prices rose 1.1 percent in June after falling 0.2 percent in May, the biggest jump since April 2015, Nationwide said. Compared with a year earlier, prices were up 3.1 percent versus 2.1 percent in May. Nationwide warned that monthly growth rates can be volatile and said it was unclear if the latest increase reflected improved demand. It expects prices to rise by about 2 percent in 2017 overall. Other analysts also have a subdued outlook. "The fundamentals for house buyers are likely to deteriorate further over the coming months with consumers' purchasing power squeezed even more by a damaging combination of higher inflation and muted earnings growth," said Howard Archer, chief economic advisor to the EY ITEM Club consultancy. House prices in London during the second quarter fell by 2.0 percent compared with the first three months of the year, the sharpest drop since the end of 2010. In annual terms, London house prices increased 1.2 percent over the period, the weakest growth on this measure since 2012. "For London's house prices to be growing at the second slowest rate in the country would have been unthinkable for much of the past decade," Jonathan Hopper, managing director of Garrington Property Finders. Demand in London has stuttered since taxes were increased on properties worth more than 1 million pounds and on second homes and buy-to-let rental properties, compounded by the Brexit vote putting off some foreign investors. Other gauges of the housing market have pointed to a slowdown across Britain. Mortgage approvals slid to an eight-month low in May, industry figures showed on Monday. More comprehensive lending figures from the Bank of England are due on Thursday at 0830 GMT. A Reuters poll of economists last month showed house prices look set to rise 2.1 percent this year but stagnate in London. [GB/HOMES] (Editing by Andrew Heavens and Hugh Lawson)