House price growth hit a six-month low in February and monthly values also dropped, Nationwide says.

The Nationwide House Price Index shows average prices grew 2.2% annually last month, down from 3.2% in January, to £210,402.

Values were also down on a monthly basis, falling 0.3%.

Robert Gardner, chief economist for Nationwide, said: “Month-to-month changes can be volatile, but the slowdown is consistent with signs of softening in the household sector in recent months.

“We continue to expect the UK economy to grow at modest pace, with annual growth of 1% to 1.5% in 2018 and 2019.

“Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.

“Nevertheless, housing market activity is anticipated to slow only modestly, since unemployment and mortgage interest rates are expected to remain low by historic standards.

“Similarly, the lack of properties on the market is likely to provide ongoing support for house prices.

“Overall, we expect house prices to be broadly flat, with a marginal gain of around 1% over the course of 2018.”

Commenting on the figures, Nicholas Finn, executive director of Garrington Property Finders, said: “January’s rapid jump in prices turned out to be a blip rather than a turning point – and the market is settling back into its pattern of modest growth.

“But for all the sluggishness of price rises, this is far from a frozen market. Buyer sentiment picked up a touch in December and this has created a more free-flowing market as a steady stream of would-be buyers get off the fence and commit to moving in 2018.”

* Separately, the value and number of mortgages approved for house purchase picked up again in January, Bank of England figures show.

The value of mortgages for house purchase increased from £11.6bn in December to £12.6bn at the start of 2018, above the previous six-month average of £12.1bn.

The number of loans approved for home buyers also increased from 61,692 in December to 67,478 in January. This is above the previous six-month average of 65,762.

Commenting on the figures, Jeremy Duncombe, director at Legal & General Mortgage Club, said: “It’s certainly welcome news to see mortgage activity pick up momentum after the New Year and with hints of an interest rise happening sooner rather than later, it will be interesting to see how the market reacts in the coming months.

“Whilst future rises will happen gradually and are likely to only have a modest impact on borrowers, there will be some who are concerned about their long-term finances.”