UK house prices 'stall' in July

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House price growth in the UK "stalled" during July, suggesting that higher interest rates are starting to bite, the Nationwide has said.

Prices grew by just 0.1% in July, cutting the annual rate of growth to 9.9% from June's rate of 11.1%.

The underlying trend also slowed, with prices in the past three months up 2% against the previous three months, down from June's comparable figure of 2.2%.

Nationwide said house prices would slow in the second half of the year.

Finances 'under pressure'

The Bank of England has increased interest rates five times in the past year in an attempt to cool inflation.

The Bank's key rate now stands at 5.75%, and many analysts expect rates to hit 6% before the end of the year.

"The Bank of England now faces a tough balancing act in the months ahead, with tightening consumer finances on the one hand and resilient economic growth on the other," said Nationwide chief economist Fionnuala Earley.

"Fundamentals do suggest that household finances are coming under considerable pressure, and that house prices and consumer spending will both see a slowdown in the second half of the year.

"The sharp slowdown in July's house price numbers could show that potential homebuyers are thinking twice about overstretching themselves in a higher interest rate environment."