In June the average house price in the UK had increased by 2.2% over the year, but July saw a more subdued 1.8% rise.
It means a typical property in the UK now has a price tag of £277,542.
Robert Gardner, chief economist at Nationwide, said: “Market activity and house prices have remained soft in recent months, in part reflecting the uncertain economic backdrop.
“Geopolitical tensions remain high, with the conflict between Iran and the US again exerting upward pressure on energy prices and market interest rates in recent weeks.”
Indeed, the data comes just a day after the Bank of England voted to maintain interest rates at 3.75%. In the meantime, mortgage lenders have been raising prices on fixed rate deals which has been impacting borrowing costs for those purchasing homes.
Chris Barry, Director at London-based Thomas Legal, told the Newspage agency he was seeing fewer new enquiries in his business.
“Today’s data comes as no surprise as the number of new enquiries have been dropping month on month since the spring,” he said.
“Stock levels are now at a 12-year high and serious buyers aren’t registering their interest in the numbers they had earlier in the year.
“The market is crying out for some kind of incentive but the Prime Minister has all but ruled anything out in the next Budget.”
But Nicky Stevenson, managing director at Fine & Country, said house prices might be subdued but the market was holding steady in a way that is sustainable to both buyers and sellers.
“Annual growth easing to 1.8% shows that the market has lost some of the momentum we saw earlier in the year,” she said, “but a small monthly rise suggests there is still underlying resilience. Buyers are active, but they are taking their time and weighing up affordability carefully before committing.
“The wider backdrop has been doing a lot of the work here. Higher energy costs and shifting expectations around interest rates have all tested confidence in recent weeks.
“It is no surprise that some buyers have paused for breath while they wait for a clearer picture on mortgage pricing and household costs.”
She added: “What matters now is whether inflation continues to ease and gives lenders more room to compete on mortgage pricing. If borrowing costs become more predictable, that should help rebuild confidence among buyers who are ready to move but have been waiting for more certainty.”