House prices inched higher in July as demand and supply both stayed low to keep the market becalmed, mortgage lender Nationwide said today.
The average price of a house rose to £168,731, up 0.2% from the previous month, and is 0.4% lower than this time last year. That compares with a drop of 1.1% a month ago.
Robert Gardner, Nationwide's chief economist, said: "Sluggish demand for homes combined with only a relatively gradual rise in the supply of available properties has helped to keep property prices relatively stable." Nationwide said the torpor had also affected property transactions with the 204,000 completed deals in the the second quarter of 2011 the lowest total for two years.
On the less volatile three months measure, prices in July rose by 0.3%, also little changed from the previous month. House prices have risen or remained unchanged for six of the seven months so far in 2011, with the highest increase being 0.6% in February.
Mr Gardner said the stable market partly reflected the uncertain economic climate, but added there had also been evidence of a trend away from ownership, especially among the younger members of the population.
"The trend is part of a reflection of stretched affordability. House prices remain relatively high compared to incomes and together with more demanding deposit requirements this is dissuading or at least delaying some first-time buyers from entering the market," he said.
In June, the Genesis Housing Association reported that the proportion of people who are homeowners had dropped from a peak of 70.9% in 2003 to 67.4% in 2009/10.
The group said if the current trend continued, only 60% of the population, or 15.5 million people, would own their own home by 2025 - 1.9 million fewer than now, while around a quarter of households would rent their home from the private sector.
Nationwide's latest report suggests prices are rising slower than the index from bank Halifax, which earlier this month reported prices rose 1.2% month on month in June with the average home costing £163,049.