UK house prices rose 2.4 per cent in May compared with the same month last year, which was a slower rate of growth than expected, according to the new data.
Between April and May, prices were down 0.2 per cent, with supply remaining low and surveyors reporting subdued levels of new buyer enquiries.
It follows the trend seen throughout the first quarter of 2018, during which London was the weakest performing region with prices dropping 1 per cent on the year before. In the first three months of the year, the north of England recorded stronger house price performance than the south, while Northern Ireland led UK regions for property price growth.
Robert Gardner, Nationwide’s chief economist, said the fact that annual house price growth has stayed within a “fairly narrow range” of 2-3 per cent over the past year suggested there was “little change in the balance between demand and supply in the market over that period”.
“There are few signs of an imminent change,” he added. “Looking further ahead, much will depend on how broader economic 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.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said it was unlikely that the near-flat trend in prices will improve imminently.
“Mortgage rates, which jumped in April, will continue to rise over the coming months,” he said, noting that the Bank of England had only delayed raising interest rates, meaning a hike is still on the cards this year.
“Demand likely will remain at levels consistent with merely stagnant house prices,” Mr Tombs said.
Jonathan Samuels, chief executive of property lender Octane Capital, said: “Tight supply and subdued demand are the key contributors to the ongoing limbo gripping the UK property market. A lethargic economy populated by cautious and squeezed consumers has created a property market lacking both momentum and direction.
“The property market is fuelled by confidence but many consumers are running on fumes. Low stock levels and continued cheap borrowing rates will prevent a material decline in prices but equally a rise greater than very low single digits is highly unlikely.
“From a house price growth perspective, 2018 is looking greyer by the day.”
Craig McKinlay, sales and marketing director at Kensington Mortgages, said the trend highlighted by the Nationwide data was “all too familiar”.
“An insufficient supply of new housing is continuing to make prices creep up year-on-year. Whilst price rises of late have been more sustainable, the challenges of the housing market remain,” he said.
“The situation can be resolved, but it will take time, and the government will need to redouble its efforts to meet the housing targets for future generations.”