Its house price index showed that this pushed the annual pace of price growth down to -2.6%, from -1.5% in June – the weakest result since August 2009.

Robert Gardner, Nationwide’s chief economist said the weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy.

“Data released last week revealed that the UK recession intensified in the three months to July, with the economy contracting by 0.7% quarter on quarter.

“Indeed, the UK economy has contracted 1.4% over the past nine months, and is now 4.5% smaller than it was in Q1 2008. Against this difficult economic backdrop, it could be argued that UK house prices have shown resilience. While prices are currently 13% below their 2007 peak, this is less than the declines seen in a number of other economies that have experienced similar or more robust economic recoveries.”

Nationwide said the UK economy is likely to see an Olympics-related boost in Q3. In addition, the Bank of England and HM treasury’s introduction of the Funding for Lending scheme, which launches today, should provide much-needed support for the economy and housing market in the months ahead.

Ashley Alexander, managing director of estate agent review website MeetMyAgent.co.uk said the summer of 2012 will be remembered for being a summer of sporting rather than property activity.

“The hope is that the Funding for Lending scheme, and the end of the Olympics, will see a surge in activity in the autumn and inject some much-needed momentum into the market. There are already signs of an improvement in mortgage rates, but we’ll have to wait and see whether this will extend to higher LTVs. Even if there is a greater availability of credit, the question is whether there is the demand for this credit. Consumers remain very cautious.”