House prices rose 0.3% in June, figures out today from the Nationwide show in what the building society called "subdued growth" for the third consecutive month.

Annual house price growth now stood at 5% the lender said.

Fionnuala Earley, Nationwide's group economist, said: "The three monthly growth rate clearly shows the slowing trend in house price inflation since March. Prices increased by 1% in the three months to June, compared with 1.6% to May and 2.1% in the three months to March."

"The annual rate of growth increased slightly to 5% in June, but only because there was a fall of 0.1% this time last year. The price of a typical house is now £165,730, around £8,000 more than this time last year and equivalent to a rise of almost £22 per day."

Interest rates are set to continue at 4.5% for some time to come, Ms Earley said, pointing out that while financial markets are still pricing in an increase in rates by the end of 2006 and a further increase in 2007, the tone of the Monetary Policy Committee was very measured, suggesting that they are still in "wait and see mode."

Estate agents’ and house builders’ data show signs of more buoyant demand in May after a weak April. This could be a response to faster house price growth through the spring, and may support further price rises in the short term.

"However, focus on the World Cup may mean lower activity in June which would seem more in line with house purchase approvals data from the Bank of England which has shown a softening trend," Ms Earley said.