The UK Housing market saw prices rise slightly in July, but overall the market is softening, according to the latest market survey from the Nationwide.

During July 2005, the average cost of a home came to £158,34, an increase of 0.2% from June. The annual house price inflation figure fell to 2.6%, which Nationwide described as the lowest rate since May 1996.

Market activity is picking up according to Nationwide. The society noted that estate agents are reporting buyers coming to a market where more sellers are willing to negotiate on prices.

However, Nationwide believe that an expected cut of interest rates in August will provide a helping hand to the market, but not cause any acceleration in the rate of house price growth.

Describing the current market conditions, Fionnuala Earley, Nationwide’s group economist said :”During the month several indicators have suggested that housing market activity is improving slightly, albeit remaining at levels significantly lower than last year. The number of house purchase approvals has picked up steadily since the start of the year, reaching a seasonally adjusted 96,000 in May, up from 83,000 in January.

Early indications suggest that there may be another small increase in official data for June, as estate agents report increased buyer activity and some softening on the part of sellers with respect to expectations on sales prices. This could be the start of some unwinding of the stalemate between buyers and sellers and see the return of some liquidity to the market.”