Prices in May were 4.6% higher than a year before, compared to the 5.2% annual increase recorded  in April.

The lender said this resumes “the gradual downward trend” seen since the summer of 2014.

On a monthly basis, UK house prices rose in May by 0.3% compared to a 1.0% monthly increase in April, with the average price now standing at £195,166.

Nationwide said the proportion of cash (non-mortgaged) purchases in the housing market reached an all-time high of 38% in the first three months of this year.

“Continued healthy demand from cash buyers has helped to support transaction levels in recent quarters, since mortgage lending has remained relatively subdued,” said Robert Gardner, Nationwide’s chief economist.

Commenting on the figures, Alex Gosling, chief executive officer of online estate agents HouseSimple.com, said: “Who would have believed that average house prices in the UK could ever hit £200k?

“But now there’s a real possibility that ceiling might be breached this year unless we see significantly more housing stock coming onto the market.

“Although annual house price growth has slowed, average house prices have still shot up from just over £189,000 in March 2015 to more than £195,000 in May.

“This jump may well be due to the General Election effect and homeowners suffering from pre-election jitters.

“Now that the General Election bottleneck has cleared, homeowners should hopefully have more confidence in the housing market.

“And we’re already seeing that, with a flurry of new properties coming onto the market.

“This trend will hopefully continue, because the market doesn’t need runaway prices right now – it needs sensible growth and a healthy balance of buyers and sellers.”