The annual rate of house price growth was the weakest for two years in August, said Nationwide, despite a 0.3% monthly rise in prices.
The average house price in the UK is now £195,621, £342 more than in July. However, the annual pace of house price growth edged down to 3.2% from 3.5% the previous month.
“This month’s data provides further evidence that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%,” said Robert Gardner, Nationwide’s chief economist.
However, he added that this trend might not be maintained unless the pace at which houses are being built accelerates.
The Nationwide report also looked at why house prices in the UK have remained high, while prices in other developed economies have plummeted.
UK house prices are currently around 5% above their pre-financial crisis levels, while prices are still well below their pre-crisis peaks in Ireland (-38%), Spain (-36%) and the Netherlands (-18%).
“The strength of the UK labour market in recent years is a key reason why house prices have recovered more quickly,” said Gardner. “Supply side developments also play an important role.
“The UK experienced a much smaller increase in building activity in the run up to the financial crisis. As a result, there was much less of an overhang of unsold properties to be worked off in recent years.”
However, he added that a “significant increase” in construction activity will now have to take place or house price growth will escalate away from earnings growth making owning a home increasingly unaffordable.
The Nationwide’s findings on house prices reflect a much more modest growth than that documented by rival Halifax.
Earlier this month, Halifax reported that house prices are almost 8% higher than they were a year ago and are likely to rise again over the coming months.
On Wednesday, the British Bankers’ Association (BBA) said that the number of people moving to fix their home loans at low rates was at its highest level for four years as homeowners scrambled to remortgage in anticipation of an interest rate increase.
However, economists now predict the rise in UK interest rates could be delayed until autumn 2016, as market turmoil in China raises the prospect of historically low borrowing costs staying in place for longer than expected.