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The average price of a UK home fell 0.5pc to £169,347 in July, according to the latest figures from Nationwide Building Society released on Thursday. This month's fall comes after prices stalled in June, and leaves them just 6.6pc higher than they were a year ago.
A combination of record low interest rates and far less unemployment than feared has helped prices rebound after slumping for 18 months in the wake of the credit crisis. However, Nationwide today suggested that the balance between buyers and sellers, which has also helped buoy prices, may be changing as the number of potential buyers dwindle.
Martin Gahbauer, Nationwide's chief economist, said: "Many potential buyers still lack the confidence to purchase their first home or trade up when faced with uncertainty over future income and employment prospects."
It will take several months, he added, to determine whether prices will resume falling or remain flat. Some economists are more pessimistic about the outlook, given the public spending cuts and still fragile state of UK banks.
Howard Archer, an economist at Global Insight, said "household confidence is currently weak and concerns over both personal financial situations and the economic outlook have been fueled by extra austerity measures."
