Property prices see 'weakest annual growth since June 2013'

House prices rose at their slowest annual pace for nearly two years in August, Nationwide Building Society has said.

Property values rose by 3.2% this month compared with a year ago, which is down from 3.5% in July and the weakest annual growth since June 2013.

Nationwide said prices across the UK rose by 0.3% on a month-by-month basis in August - taking the average property value to £195,279.

This also marks a slight slowdown on the 0.4% month-on-month rise recorded in July.

The annual pace of price growth is now less than a third of what it was a year ago, hitting double digits for much of last summer, with a 11% annual increase recorded in August 2014.

Nationwide said the slowdown in annual house price growth provides further signs that it may be stabilising close to the level of earnings growth in the UK, which has historically settled at around 4%.

But Robert Gardner, Nationwide's chief economist, cautioned that more new homes need to be built to meet surging demand.

He said: "With UK house building running well below the expected rate of household formation in recent years and with demand for homes rising, a significant increase in construction activity is required if affordability is not to become stretched in the years ahead."