Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“Stability has been the watchword for the UK housing market over the past 12 months. Sluggish demand for homes, combined with only a gradual rise in the supply of available properties, has helped to keep property prices relatively stable.
“This pattern was maintained in July, with UK house prices rising by a modest 0.2% during the month, leaving prices 0.4% below the level prevailing in the same month of 2010. At 0.3%, the three month on three month measure of house prices was little changed from the 0.4% rate of increase recorded in June.
“The volume of property transactions has also remained at historically low levels in recent months. Only 204,000 housing transactions were recorded in the second quarter of 2011, the lowest outturn since Q2 2009.
"No doubt much of this reflects the uncertain economic climate. However, some commentators have suggested that there may be more fundamental factors at play, such as a trend away from owneroccupancy.
A nation of renters?
“The English Housing Survey shows that the share of owneroccupiers declined to 67.4% in 2009/10, down from a peak of 70.9% in 2003 and marking the seventh consecutive annual decline. This is likely to be the result of a number of factors.
“The trend is in part a reflection of stretched affordability. House prices remain relatively high compared to incomes and, together with more demanding deposit requirements, this is dissuading, or at least delaying, some first time buyers from entering the market.
“It may also be the case that younger households find owneroccupancy less suitable for their needs. For instance, in 1991, 36% of households aged 16-24 were owner-occupiers, a proportion which, in retrospect, seems very high. Indeed, by 2009/10 the proportion had declined to 14%, with private renting the most common form of tenure for this segment.
"This is partly a function of more people progressing to higher education and entering the labour force later. Indeed, the proportion of young people entering higher education in England increased from 30% to 36% between 1994 and 2010, according to the Higher Education Funding Council.
“While many people in the 16-24 age group still aspire to buy a home eventually, renting may also have become the more suitable option in the early stages of a career. People move readily between jobs, increasing the uncertainty about their earnings prospects and where they are going to settle.
"In addition, people are increasingly recognising that they are going to have to work for longer before they are able to retire, so delaying their first steps into the property market may also make sense.
"The improved quality of the private rental stock is also likely to have made private renting a more appealing option.
“Nevertheless, as far as older households are concerned, preferences shift markedly towards owning a house as age increases, with owner occupancy rising to 47% for 25-34 year olds and to 67% for 35-44 year olds. So, in this respect, the UK remains a nation of homeowners.
“As the economic outlook brightens, labour market conditions strengthen and housing affordability becomes less stretched, so demand for housing should improve. Time will tell whether a greater preference for renting will remain in evidence or the desire for home-ownership once again asserts itself.”
Matt Hutchinson, director, flat and house share website Spareroom.co.uk, comments:
"The Nationwide talks of stability but this is little more than a euphemism for stagnation. With the exception of London, property transactions are at severely low levels due to the disconnect between buyers and sellers.
"Properties aren't selling because what buyers are prepared to pay falls well short of what sellers are willing, or able, to accept. As Nationwide points out, the days of young couples buying their first home in their early twenties are all but over.
"Within a matter of years we have transitioned from a culture of property ownership to property rental. This is creating its own problems though, putting tremendous strain on the rental market with people delaying buying their first property or making the decision not to buy at all.
"Levels of new rental stock coming onto the market can't keep pace with the number of people looking and this is pushing rental prices up, with many parts of the UK seeing double-digit rent rises in the past 12 months.
"If we really are starting to see a shift towards long term property rental then the issue of sufficient supply will need to be addressed."
Nick Hopkinson, Director of property company PPR Estates comments:
“Yet again, the national ‘average’ numbers being reported in the headlines today fail to show the real story for the current UK housing market. Outside of the current London bubble, which is being driven by international money and the City, house prices and the number of completed sales occurring are in total collapse.
“Regionally, the toxic combination of job worries, household incomes falling, rising inflation and public sector cuts are having a severe impact outside the South East on both buyers and sellers. Buyers need huge deposits and a perfect credit score to get any kind of viable mortgage even if they can find a seller prepared to sell at a realistic price.
"Sellers are increasingly finding themselves facing up to negative equity as achievable prices fall and are often ‘trapped’ in their own homes for the foreseeable future as they can no longer afford to accept the prices being offered. Recent reports of over 1 million homeowners being in f
