British house prices rose at their slowest annual rate in nearly two years in May, as growth continued to moderate after double-digit increases in the middle of 2014, figures from mortgage lender Nationwide show.
Nationwide said UK house prices in May were 4.6% higher than a year before, the smallest annual increase since August 2013 and down from a rate of 5.2% in April.
UK house price inflation hit a peak of 11.8% in June last year, but eased as regulatory restrictions on mortgage lending took effect, and Nationwide said cash buyers now accounted for a record 38% of purchases.
Nationwide said it expected house price rises to average 4% a year over the long term, in line with pre-crisis rates of wage growth, assuming sufficient homes are built.
"However, much will depend on supply side developments. In recent years the rate of building activity has remained wel lbelow that required to keep up with population growth," Nationwide's chief economist Robert Gardner said.
Last month alone, UK house prices rose 0.3% compared with a 1% increase in April, in line with average forecasts in a Reuters poll of economists.
May saw Prime Minister David Cameron's Conservative Party unexpectedly win an outright parliamentary majority in a national election.
The Conservatives want to boost falling rates of home ownership, but critics say they are not doing enough to boost the supply of homes alongside stoking demand.
Growth among Britain's housebuilders picked up in May, a survey from Markit/CIPS showed earlier this week. Many economists expect house prices to pick up more rapidly after the slowdown in recent months.
Meanwhile, figures from the Bank of England this week showed the biggest jump in the number of mortgages being approved in over six years, taking April's total to the highest in 14 months.
A poll of economists by Reuters showed that on average, economists expect house prices to rise by 6% this year and 5% in 2016, up sharply from forecasts they made three months ago.