Online estate agent Rightmove reported that house prices fell in August and were at a virtual standstill on an annualised basis as the market entered a quieter holiday season.
Rightmove's house price index showed a downward move in monthly prices as "stretched buyer affordability" and the clouded political outlook acted as a brake on growth.
National average asking prices
The average asking price in August fell 0.9% month on month after rising by 0.1% in July. This left annual house price growth at a cool 3.1%.
Rightmove calculated the average asking price for properties in the UK at £313,663, driven by a 0.1% rise in "top of the ladder" sales.
The average asking price for properties sold to first-time buyers fell 1.7% and properties sold to "second-steppers" fell by 0.4%.
The estate agent said market fundamentals remained strong, and reported robust demand in an environment of lower interest rates and low unemployment.
Supply, however, was failing to keep pace.
Rightmove said: "Prospective buyers in many parts of the country are seeing the highest proportion of properties marked as sold than at any time in the last seven years."
Even with 7.6% more sellers coming to market in July compared to the same month a year ago, buyer choice was restricted as strong sales and buyer demand put strain on the limited supply of new housing.
Price growth stretches affordability
Stalling price growth was attributed to stretched buyer affordability. Buyers were "very price sensitive", Rightmove said and added that some properties had hit their price ceiling.
Annual house price growth, at Rightmove's 2.8% outstrips annual average wage growth at 2.1%, leaving potential buyers squeezed out.
Rival house price indexes measured by bank Halifax and Nationwide Building Society recently showed annual house price growth at 2.1% and 2.9% respectively.