House prices rose by 0.1% in June according to the latest report by Nationwide.

The annual rate of house price inflation dropped for the second consecutive month from 9.8% to 8.7%, with the average UK home costing £170,111.

Martin Gahbauer, Nationwide's Chief Economist said this is "reflective of the fact that house prices were continuing at a faster pace this time last year".

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He said: "Barring a significant pick-up in house prices over the next few months, the annual rate of inflation should continue to drift lower, in light of the very strong price increases recorded during the summer of 2009. Over the first half of 2010, UK house prices have risen by a cumulative 3.0%.

"Recent indicators point to an increase in the supply of property coming to the market for sale, perhaps in response to the abolition of HIPs in the opening days of the new coalition government. With the level of demand remaining broadly stable, this would in part help to explain the recent slowdown observed in the rate of house price inflation."

(CD/GK)