The average house price in July 2011 was £168,731, 0.4% lower when compared to July 2010.
Robert Gardner, chief economist at Nationwide, said: “Stability has been the watchword for the UK housing market over the past 12 months. Sluggish demand for homes, combined with only a gradual rise in the supply of available properties, has helped to keep property prices relatively stable.
“This pattern was maintained in July, with UK house prices rising by a modest 0.2% during the month, leaving prices 0.4% below the level prevailing in the same month of 2010. At 0.3%, the three month on three month measure of house prices was little changed from the 0.4% rate of increase recorded in June.
“The volume of property transactions has also remained at historically low levels in recent months. Only 204,000 housing transactions were recorded in the second quarter of 2011, the lowest outturn since Q2 2009.
“No doubt much of this reflects the uncertain economic climate. However, some commentators have suggested that there may be more fundamental factors at play, such as a trend away from owner-occupancy.”
Matt Hutchinson, director of Spareroom.co.uk, said: "The Nationwide talks of stability but this is little more than a euphemism for stagnation.
"With the exception of London, property transactions are at severely low levels due to the disconnect between buyers and sellers.
"Properties aren't selling because what buyers are prepared to pay falls well short of what sellers are willing, or able, to accept.
"As Nationwide points out, the days of young couples buying their first home in their early twenties are all but over.
"Within a matter of years we have transitioned from a culture of property ownership to property rental.
"This is creating its own problems though, putting tremendous strain on the rental market with people delaying buying their first property or making the decision not to buy at all.
"Levels of new rental stock coming onto the market can't keep pace with the number of people looking and this is pushing rental prices up, with many parts of the UK seeing double-digit rent rises in the past 12 months.
"If we really are starting to see a shift towards long term property rental then the issue of sufficient supply will need to be addressed."
