House prices grew by 0.3% in July, down on the 0.4% growth recorded in each of the previous two months, Hometrack has reported.

A continued slowdown in the rate at which new buyers are entering the market (up 1% in July) is starting to reduce the upward pressure on house prices. The geographic coverage of price rises also slowed in July with 29% of the country registering price rises and just 1.8% recording price falls.

London continues to be the engine for overall house price growth with prices in the capital up 0.7% in July, down from a 0.9% increase in June. Across the rest of the country, three regions saw prices remain unchanged in July (East Midlands, Yorkshire & Humberside, North East) while the remainder all registered price increases of up to 0.4% in the South East.

Despite the modest slowdown in prices in July all the key market indicators continue to improve. The average time on the market has fallen to 8.2 weeks which is the lowest for six years thanks to rapidly shortening sales periods in London and the South East. Vendors across the country are benefiting from a lower discount on asking price which currently averages just 5.6% – another measure that is back to 2007 levels.

Richard Donnell, director of research at Hometrack, said: “The latest survey shows overall housing market conditions continuing to improve with shortening sales periods and vendors achieving lower discounts on asking price. However, the rate of house price growth slowed slightly in July as a result of weakening demand as we enter the holiday season.

“The momentum generated over the last six months looks set to moderate in the short term with less upward pressure on prices. The year has got off to a strong start. The level to which new buyers enter the market in the autumn will dictate whether 2013 turns out to be the year with the highest increase in house prices since the start of the downturn.”