The Nationwide Building Society has reported that annual pace of house price growth remained broadly stable in July at 2.9%, just lower than the 3.1% recorded in June.

The UK’s largest building society saw house prices increase by 0.3% month-on-month.

Robert Gardner, Nationwide’s chief economist, said: “On the surface, this appears at odds with recent signs of cooling in the housing market. The number of housing transactions dipped to their lowest level for eight months in June, while in the same month the number of mortgages approved for house purchase moderated to a nine-month low of c.65,000.

“But a lack of homes on the market appears to be providing support, with annual house price growth remaining only just outside the 3-6% range, that has been prevailing for most of the past two years.

“This pattern looks set to be maintained in the near term. Survey data point to relatively sluggish levels of new buyer enquiries, but at the same time surveyors report that relatively few properties are coming onto the market (and at a time when the number of homes on estate agents’ books is already close to 30 year lows).

“Ultimately, housing market developments will depend on wider economic performance. The UK economy slowed noticeably in the first half of the year and there has been little to suggest a significant departure from recent trends in the quarters ahead.

“While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living.

“This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead.

“Nevertheless, constrained supply is likely to continue to provide support for house prices and, as a result, we continue to expect prices to rise by c.2% over 2017 as a whole – only modestly lower than the levels recorded in recent months.”

Russell Quirk, founder and CEO of eMoov.co.uk, added: “UK homeowners will have their fingers crossed that this turn around in price growth will be more consistent than the British summertime.

“At a glance, it looks as if the dark clouds of buyer and seller uncertainty are finally starting to lift from the UK housing market, with welcome signs of positive property price growth beginning to shine through.

“The summer months can generally be a slower time of year with many taking a break from their sale to go away, so it is promising that the market has bounced back despite the slump in transactions and mortgage approvals witnessed in June.

“Although buyer demand may take some time to return to normal levels, a sustained shortage of stock should continue to stimulate an upward price trend.”