British house prices rose by their smallest amount in more than a year in July, up just 0.1 per cent and taking the annual rate down to 9.9 per cent, the Nationwide building society said this morning.
July's gain was the weakest monthly increase since April 2006 and compared with a 1.1 per cent rise in June, when annual house price inflation was 11.1 per cent. Analysts had predicted a 0.5 per cent rise on the month, for an annual rate of 10.6 per cent.
The average price of a home was £184,270 pounds (€275,659).
Nationwide chief economist Fionnuala Earley said the easing in house price inflation suggested the Bank of England's five interest rate rises in less than a year were taking their toll on the market.
"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," Earley said.
The BoE hiked rates to 5.75 per cent this month and financial markets are pricing in one more increase in borrowing costs to 6 per cent by the end of this year.
But that move is unlikely to be delivered at the central bank's next rate-setting meeting next week after dovish comments from some policymakers along with signs of weakening consumption.