House prices have risen by 0.4 per cent in August, down from a 0.9 per cent rise last month, according to the Halifax house price index.
Economists had forecast a rise of 0.7 per cent. House prices have risen 5.4 per cent in the three months to August on the same period last year.
Nicholas Ayre, managing director of homebuying agency Home Fusion:
The problem we have is limited supply of housing: not enough is being built, which results in rising prices. Domestic demand remains strong but some of the bigger schemes are also being driven by offshore demand, and this is pushing prices higher still.
Howard Archer, chief UK and European economist, IHS Global Insight:
With housing market activity likely to strengthen further, we expect house prices to see solid gains over the coming months.
We do not expect house prices to race ahead in the near term given extended low earnings growth and the fact that housing market activity is currently still far from buoyant compared to pre-crisis levels despite the recent improvement.
Nevertheless, there is a mounting danger that house prices could really take off further out, especially as a shortage of new properties for sale could be a significant factor in some areas, notably London and the South East.
While an improving housing market is helpful to growth prospects, it is vitally important for stability and longer-term growth prospects that a new housing price bubble does not emerge.
Consequently, should the housing market gain substantial momentum over the coming months, the case for limiting or even eventually pulling the plug on the “Help to Buy” mortgage guarantee scheme that is due to start in 2014 will look ever more compelling, even if the government may find this politically difficult to do.