Property prices in the UK are falling both monthly and annually, with an average value of £214,745, according to the latest lender index.

Price growth in the 12 months to August 2018 fell to 2% from 2.5% in July and month on a month values were down by 0.5%, the biggest monthly fall since July 2012, the data from Nationwide shows.

However, Robert Gardner, Nationwide’s chief economist, pointed out that annual house price growth remains within the fairly narrow range of 2% to 3% which has prevailed over the past 12 months, suggesting little change in the balance between demand and supply in the market.

‘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 house price growth and market activity this year,’ he explained.

‘Borrowing costs are likely to remain low. Overall, we continue to expect house prices to rise by around 1% over the course of 2018,’ he added.

The unpredictable housing market is also to blame for the slowdown in the rate of UK house price growth, according to Russell Quirk, chief executive officer of Emoov.

‘This is the largest monthly decline in over six years and while the monthly measurement can be erratic it highlights the volatility of the current landscape, with a number of industry sources reporting huge swings in both positive and negative movement from one month to the next,’ he pointed out.

‘This is largely due to the subdued level of activity from both buyers and sellers with even the slightest uplift impacting the top line figures. In the short term, we will probably see the market remain unsettled over the coming months, but the broader picture is that house prices are still within the two to three percent range and in line with industry expectations,’ he added.

‘The continued lack of stock to satisfy buyer demand will help maintain this level of growth and ensure prices remain fairly buoyant and so we won’t see any drastic decline in prices,’ he concluded.

Andy Soloman, chief executive officer of Yomdel, believes an unstable economy is to blame and when a more positive outlook occurs to buyers and sellers a continued imbalance of stock available to meet current demand should see price growth pick up in the short term.

‘However, with more interest rates increases on the way at some point down the line and the final Brexit deal still to be negotiated, any positive outlook could soon be overshadowed,’ he said.

Ishaan Malhi, chief executive officer of online mortgage broker Trussle, also thinks that there will be challenges ahead. ‘Falling house prices pose the risk of negative equity for anyone with a large amount of debt attached to their home, which can prevent home owners from being able to move or remortgage,’ he said.

‘Those on variable rate mortgage deals will have also seen their monthly repayments increase following the recent base rate hike. If you’re on a variable rate mortgage, it’s worth investigating whether you could switch to a better deal,’ he added.