Average house prices across the UK increased by 0.6% in August, taking the annual rate of growth to 5.6%, according to the Nationwide.

Robert Gardner, Nationwide’s chief economist, said: “The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months. New buyer enquiries have softened as a result of the introduction of additional stamp duty on second homes in April and the uncertainty surrounding the EU referendum.

“The number of mortgages approved for house purchase fell to an 18-month low in July. However, the decline in demand appears to have been matched by weakness on the supply side of the market. Surveyors report that instructions to sell have also declined and the stock of properties on the market remains close to thirty-year lows. This helps to explain why the pace of house price growth has remained broadly stable.”

However, Gardner warns that business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July, and, if sustained, this is likely to have a negative impact on employment and household budgets. 

The latest Nationwide index puts the average price of a home in the UK at £206,145.