House prices fell by -0.6% between June and July, the Halifax has reported.
The average price of a home is now £198,883.
Meanwhile, home sales increased by 5.0% between May and June.
Stephen Noakes, managing director of retail customer products, said: “House prices in the three months to July were 2.4% higher than in the previous quarter. This measure of the underlying rate of house price growth eased following last month’s sharp rise. Annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014.
“The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand. Supply is highly restricted with the stock of homes available for sale falling further to new record lows.
“This combination of well-supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near-term.”
Alex Gosling, CEO of online estate agents HouseSimple.com, added: “This is the first drop in average house prices since February. After a peak in June when prices broke through the £200,000 glass ceiling, we’ve seen a slide back.
“But despite last month’s slip, prices seem to be on a steady trend upwards with the last quarter showing seemingly even more confidence in the market.
“There appears to be cautious optimism although this is somewhat overshadowed by a looming interest rate rise expected at the tail end of the year.
“The market is seeing buoyant activity with mortgage approvals bouncing upwards but the elephant in the room is supply.
“Again the housing shortage is an ogre we can’t shake off. Stock is at a record low with three successive months of slippage in available homes for sale. Without more home building quickly coming on stream, we are in danger of another painful year ahead for those wanting to take their first step onto the housing ladder.
“But in summary, when Nationwide says they’re up, the Halifax reveals they’re down. Who are we to believe on house prices?”
