House prices rose by 0.3% in May against the backdrop of a 'lacklustre' economy, according to Nationwide.
The modest monthly increase, up from a 0.6% increase in April, puts the average property price at £167,208, which is still 1.2% lower than a year ago. On a three-month basis, prices have risen by 0.6%, broadly unchanged from the previous month, according to data from the lender.
Robert Gardner, chief economist at the building society, believes the "modest" growth continues to mirror the "lacklustre trends evident in the wider economy".
"The UK economy returned to growth in the first three months of 2011, albeit at a modest pace. Nevertheless, the modest improvement in economic conditions has so far been insufficient to pull the housing market out of its torpor," he says.
Gardner points to continuing "headwinds" facing households as reason for the modest growth in the property market.
He expands: "Despite recent increases in employment, household budgets remain under pressure, with debt levels still high and inflation rising almost twice as fast as wages."
Going forward, Gardner says the outlook remains "uncertain" and house prices will move "sideways": "Economic conditions are expected to continue to improve as the year progresses, but the recovery is likely to remain weak compared with previous upturns."