House prices slipped by 0.2 per cent from June to £236,120 in July, but compared to a year ago they were still 4.1 per cent higher, according to the latest Halifax index.
The lender says the annual increase is partly down to relatively low growth this time last year.
It follows monthly transaction data from HM Revenue & Customs which showed that home sales were down 16.5 per cent to 84,490 in June compared to a year ago, while Bank of England figures show mortgage approvals were slightly higher than the 12-month average at 66,440.
Halifax managing director Russell Galley says: “The average UK house price fell slightly for a second month, as the market continues to tread water with marginal increases or decreases in each monthly period.
“That said, it is worth remembering that while economic uncertainty continues to weigh on the market, the overall trend actually remains one of comparative stability, with average prices down by less than £600 over the last three months.
He adds: “We have seen a reported drop off in the number of properties sold during the early months of summer, which may lead some to speculate a downturn is on the horizon.
“However, new buyer enquiries are up, and favourable mortgage affordability – driven by low interest rates and strong wage growth – should continue to underpin prices for the time being.”
“In the longer-term, we believe there is unlikely to be a step change in market activity until buyers and sellers see some form of resolution to the current economic uncertainty.”
Garrington Property Finders managing director Jonathan Hopper says: “The Spring bounce is morphing into a Summer slump.
“Two consecutive months of falling average prices – modest though the drops were – show how the brief flurry of momentum seen in late Spring has petered out.”
Hopper says that in the weakest markets, such as London and the South East, buyers are “having a field day” with homes selling at up to 30 per cent below the original asking price.
SPF Private Clients chief executive Mark Harris says: “The summer is always quieter as people head off on their holidays but with new buyer enquiries up, there are encouraging signs that business may pick-up in the autumn.
“However, until the Brexit deadline of 31 October has passed, it seems very unlikely that there will be a serious uptick in activity.
“Even then, we may also see people holding fire in anticipation of Boris Johnson reforming stamp duty.”
Coreco managing director Andrew Montlake believes the quarterly figure is the most accurate measure to look at, which at 0.4 per cent shows the market is “just keeping its head above the water”.
Montlake says that cheap mortgage rates and low supply are propping up house prices for now.
But he says: “The impact of no-deal on the UK property market is thick in the air.
“The consensus appears to be that the property prices will suffer if we exit the EU without a deal.”
Montlake adds: “Of course, some suspect Boris is bluffing and that a deal will still happen, which would again be a positive for the market.
“What we can be sure of is that, with so many unknowns in play, most households will sit tight during the next two to three months and transactions tail off.”
The Halifax index drew criticism earlier this year after showing significant fluctuations that were not mirrored in other indices.