Where next for house prices?

What is happening to UK house prices at the moment? According to Nationwide's latest survey, prices rose by just over 1% in June. The jump follows three consecutive months of falls the first such run since the financial crisis. It also brings the annual rate of price inflation up to 3.1%, from 2.1% in May within the "3%-6% range that has been prevailing since early 2015", says Robert Gardner, Nationwide's chief economist.

But the national average disguises plenty of regional variation. London property continues to struggle (at least compared with the boom years). The capital saw the weakest house-price growth since 2012, with prices climbing by just 1.2% on an annual basis. Meanwhile, the number of new buyers making enquiries in London has also fallen, according to the Royal Institution of Chartered Surveyors, "suggesting that a fresh slowdown could be under way".

This perhaps shouldn't come as a surprise. Prices in London are roughly 55% above their 2007 peaks, whereas prices in other parts of the UK notably in the north, Yorkshire and Humberside, and the northwest, are still below 2007 levels. However, while London prices might now be gently declining in "real" terms (ie, after inflation), it's hardly rapid enough to make London affordable for the average buyer. In a sign that property in the capital remains out of reach for many, the number of people abandoning London for other parts of the UK hit a five-year high last year, according to estate agency Savills.

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In the 12 months to June 2016, net migration from the capital to elsewhere in the UK came in at 93,000. This is 80% up on the same figure five years ago, according to data from the Office for National Statistics and the Land Registry. Even so, the city's population continues to grow the number of people living in the city hit 8.8 million in mid-2016 (driven by births and immigration, rather than internal migration). According to Savills, the typical homeowner leaving London swapped average house prices of £580,000 for an average closer to £330,000 still pricey compared with the national average, but a huge saving in relative terms.

So is the rest of the UK likely to play catch-up with London, or are the wobbles in the capital set to spread elsewhere? Prices in the East Midlands and East Anglia have risen the most, with average prices rising at an annual rate of 5% and 4.4% respectively. And price growth in northern England exceeded that in southern England for the first time in eight years, says Nationwide.

However, as research group Capital Economics points out, the fact that the East Midlands is near the top of the pack in terms of house-price gains "largely reflects the slowdown seen elsewhere", rather than any specific strength in the East Midlands' underlying economy "the performance of which has been at best modest".

So where will the market go from here? One factor propping prices up is the ease of borrowing money to buy property. On that front, mortgage lenders have increased credit availability over the past three months, as they compete to gain market share, according to Capital Economics.

However, a few factors might offset this firstly, the Bank of England is paying close attention to lending standards and is unlikely to "sanction any meaningful loosening in credit conditions in the foreseeable future". Secondly, demand for buy-to-let property is likely to be weaker as landlords continue to lose their tax advantages. In all, Capital Economics reckons that house prices are still 15% overvalued, "given the current level of earnings and lending criteria".