British house prices unexpectedly fell last month, bringing the annual rate of price increases to its lowest in two years, mortgage lender Nationwide said on Thursday.

Nationwide said house prices dropped by 0.2 per cent on the month in June - well below economists’ forecasts of a 0.2 per cent rise - pushing the annual rate of growth to a two-year low of 3.3 per cent from 4.6 per cent in May.

"This maintains the gradual downward trend that has been in evidence since mid-2014," Nationwide economist Robert Gardner said. "House price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth."

Reuters