Ashley Webb, senior economist at Capital Economics, said the modest rise “underlines the continued drag on buyers’ appetite from the previous rise in mortgage rates”.
He added: “Uncertainty over possible tax rises in the autumn budget on October 28 will probably only add to the restraints on house prices in the coming months.
“That’s why we think prices will do little more than flatline over the remaining four months of this year, which would leave prices about 1.5 per cent higher in the fourth quarter than a year earlier.”
The research firm expects the property market to regain momentum next year, with prices rising by an above-consensus 3.5 per cent as the bank rate is lowered from 3.75 per cent to 3 per cent.