UK house prices fell by 0.5 % in July, the first time since February according to the Nationwide.

This takes the average house price to £169,347 and the annual rate of inflation slips back to 6.6%

Martin Gahbauer, Nationwide's Chief Economist, said: "So far in 2010, demand from homebuyers has made little progress in building upon the recovery seen during much of 2009. Despite the introduction of a second stamp duty for the vast majority of first time buyers and record low interest rates, the number of properties changing hands in the UK is still running at only half the levels prior to the financial crisis and recession."

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According to the report buyers are still in short supply due to the restrictive credit conditions and the future economic outlook.

Mr Gahbauer said: "It will take several more months to establish whether house prices are now simply oscillating around a flat price trend or whether a period of downward trending prices may be in store."

(CD/KMcA)