Prices rose 0.5 per cent in May, following April’s 2.3 per cent drop and March’s 2.2 per cent jump – volatility driven by the stamp duty holiday for first time buyers which expired in March.
Over the three months to May, prices rose 0.8 per cent – the second consecutive quarterly increase, suggesting that there could be some signs of life emerging in the market.
However, that still leaves prices 0.1 per cent below where they stood in May 2011, demonstrating the underlying weakness in prices over the last year.
Economists warned that only London’s housing boom is keeping national prices steady, and so any blow to the capital’s market could knock prices nationally.
“The market looks vulnerable to a London-centric shock, such as a new financial crisis, or a sharp rise in the exchange rate,” said Capital Economics’ Ed Stansfield.