House prices have grown just 0.1 per cent this month, their slowest growth rate for 15 months and the latest evidence the market has stalled, according to Nationwide, the building society.

Steep rises in utility prices have also stretched household finances. Nationwide has been predicting that over the full year house prices could rise by as little as 5 per cent.

The meagre price rise took the year-on-year increase in house prices to 9.9 per cent, the first time in three months it has fallen below 10 per cent, Nationwide said.

Five successive rate rises have taken their toll on consumer confidence, with Bank Rate now predicted to rise to at least 6 per cent this autumn.

Fionnuala Earley, Nationwide's chief economist, said: "The Bank of England now faces a tough balancing act in the months ahead, with tightening consumer finances on the one hand and resilient economic growth on the other. Fundamentals do suggest that household finances are coming under considerable pressure, and that house prices and consumer spending will both see a slowdown in the second half of the year.

"The sharp slowdown in July’s house price numbers could show that potential homebuyers are thinking twice about overstretching themselves in a higher interest rate environment."

The average house price was £184,270 in July, an increase on a year ago of £16,537, Nationwide said.

Signs of a slowdown were confirmed by data from the British Bankers' Association, which showed that the number of new mortgage approvals for house purchase fell back in June.

Approvals were down to 75,300 from 77,400 the month before, and were 11 per cent lower than a year ago. Economists typically see approvals as a good leading indicator of the property market.

Kelvin Davidson, property economist at Capital Economics, said: "The moderation in mortgage demand has been gradual over the first six months of the year. Even so, that softening is set to continue on the back of further interest rate rises and strained affordability."

The downbeat news for homeowners came as Bradford & Bingley, the lender, said that the rate of growth in residential mortgage markets was slowing.

It said that arrears on loans had increased modestly and that it expected them to increase slightly as strains on personal finances continue to bite.

Nationwide's monthly survey echoes the findings of other reports into the housing market by firms such as Halifax, Rightmove and Hometrack.

Howard Archer, the chief UK and European economist at Global Insight, said: "The Nationwide survey adds to the increasingly compelling evidence that the housing market is starting to lose significant momentum as demand is increasingly pressurised by the rising affordability pressures stemming from higher interest rates, modest real disposable income growth and elevated house prices."

Nevertheless, B&B, one of the biggest buy-to-let lenders, reported a record rise in net new residential lending, almost doubling between January and June to £4.5 billion. It maintained that the fundamentals of the housing market were strong.

Steven Crawshaw, the chief executive, said that buy-to-let had been "very buoyant" in the first half — "and we believe it will continue to outperform the mainstream market in the second half and beyond".

Underlying profits at B&B rose 10 per cent to £180.4 million during the six months to the end of June.

The Bank of England has increased the cost of borrowing five times since last August in an attempt to stem inflation and put the lid on price growth on the high street.

The inflation rate was 2.4 per cent in June, marginally below May but still ahead of the Bank's 2 per cent target.

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