House prices edged lower last month but the overall market is relatively stable, mortgage lender Nationwide said today.
The average price of a house fell 0.6% month-on-month in August to £165,914, Nationwide said, which is 0.4% lower than a year ago. Prices increased 0.3% in July.
Robert Gardner, Nationwide chief economist, said the decline in August did not change the picture of "relative stability that has characterised the market over the past 12 months".
Nationwide said house prices actually increased 0.1% over the less volatile three-month measure, though this was lower than the 0.3% increase in the previous three months.
House prices have declined in two of the the last six months, according to Nationwide, with the last drop in April.
Mr Gardner said sluggish demand for homes, combined with only a gradual rise in the supply of available properties, had helped to keep property prices stable since last summer.
He went on: "We expect this trend to be maintained over the remainder of 2011, although downside risks have increased as UK and global growth prospects have weakened."
Mr Gardner said the major risk for the housing market is that weak economic growth could lead to a further deterioration in the labour market.
He added: "For some time now the residential property market has been moving sideways, as weak demand for homes co-existed with a situation where relatively few homes were coming on to the market.
"A further fall in employment would be likely to upset the relatively delicate demand-supply balance and put downward pressure on prices."
Nationwide said it only expects houses to fall modestly for the remainder of 2011.
Howard Archer, chief UK and European economist at IHS Global Insight, has forecast house prices to have fallen by around 5% by mid-2012.
He said: "The fall in house prices in August ties in with our belief that house prices are likely to trend down gradually over the coming months in the face of persistently weak economic activity, rising unemployment and low consumer confidence."