House prices rose at their slowest annual pace for nearly two years in August, Nationwide Building Society has said.
Values rose by 3.2 per cent this month compared with a year ago, which is down from 3.5 per cent in July and the weakest annual growth since June 2013.
The mutual said prices rose by 0.3 per cent on a month-by-month basis in August - taking the average value to £195,279.
That is a slight slowdown on the 0.4 per cent month-on-month rise recorded in July.
The annual pace of price growth is now less than a third of what it was a year ago, hitting double digits for much of last summer, with a 11 per cent annual increase recorded in August 2014.
Nationwide said the slowdown provides further signs that it may be stabilising close to the level of earnings growth in the UK, which has historically settled at around four per cent.
Nationwide chief economist Robert Gardner said more new homes need to be built to meet demand.
“With UK house building running well below the expected rate of household formation in recent years and with demand for homes rising, a significant increase in construction activity is required if affordability is not to become stretched in the years ahead.”
Nationwide said there were worrying signs that supply is far from meeting supply, with surveyors reporting the lowest number of properties on their books in July since records began in the 1970s, while new buyer enquiries picked up.
Despite house price growth easing in recent months, Nationwide said the UK property market had proved “remarkably resilient” and recovered well after the financial crisis, with prices now standing around five per cent higher than they were before 2008.