The Nationwide Building Society has reported that house prices in July rose 0.6% month-on-month.

The average house price was £217,010.

Robert Gardner, Nationwide’s chief economist, said: “There was a slight uptick in annual house price growth in July to 2.5%, from 2.0% in June. Nonetheless, annual house price growth remains within the fairly narrow range of c2-3% which has prevailed over the past 12 months, suggesting little change in the balance between demand and supply in the market.

“Looking further ahead, much will depend on how broadereconomic conditions evolve, especially in the labour market, but also with respect to interest rates.

“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.

“Overall, we continue to expect house prices to rise by around 1% over the course of 2018.”

Jonathan Samuels, CEO of Octane Capital, added: “While the real financial impact of a quarter percent rate rise will be modest, it’s the impact on sentiment that matters most. Gradual and limited increases are the party line, but the Bank of England’s track record on forward guidance is hardly robust.

“If this week’s rate increase happens, it could be perceived as heralding more hikes, which could create an environment of even greater caution. The direction of inflation and wage growth will be key to how the property market accommodates rates rises, however small, during the course of the next year.

“While the jobs market overall is strong, many households are feeling the pinch. With Brexit negotiations in a state of disarray, confidence is being further eroded.

“The market may have nudged up in July but it’s hard to see the broader trajectory of house prices as being anything other than flat.”