"Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages."
House prices fell by 1% between May and June - the first monthly decline since January - according to the latest Halifax house price index.
Annual house price growth has now eased to 2.6%, lower than in May (3.3%) and the lowest annual rate since May 2013 which was also 2.6%.
House prices in Q2 were 0.1% lower than in the previous three months. This was the third successive quarterly fall; the first time this has happened since November 2012.
Martin Ellis, Halifax housing economist, said: “House prices have flattened over the past three months. Overall, prices in the three months to June were marginally lower than in the preceding three months. The annual rate of growth has fallen, to 2.6%; the lowest rate since May 2013.
“Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages. This, combined the new stamp duty on buy to let and second homes in 2016, appears to have weakened housing demand in recent months.
“A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale should help continue to underpin house prices over the coming months.”