Annually, growth remained in double digits but dipped slightly from 11.8% in June to 10.6% in July.

Robert Gardner, chief economist at Nationwide, said the cooling-off of house price inflation was not unexpected given the moderation in mortgage activity in recent months.

But Gardner said the growth in mortgage approvals in June compared to May added weight to the argument that the dip in house prices would prove to be a temporary lull.

He added: “With the labour market strengthening, mortgage rates expected to remain low and consumer confidence rising, activity is likely to recover in the months ahead.

“Over the longer term, the trajectory of house prices will remain crucially dependant on supply side developments.

“While there have been some encouraging signs that construction activity is picking up, the pace of home building continues to run far below most estimates of what would be required to keep up with household formation in the years ahead.”