The rise edged up the average cost of a UK property to £191,423 – just slightly below the level seen at the beginning of the year. The annual rate at which house prices are falling also eased for the third month in a row, dropping to 10.7%.

The figures follow data from the Royal Institution of Chartered Surveyors which show that the shortage of homes on the market has helped stabilise prices.

The CLG also revealed prices rose by 2.6% in the second quarter of the year, with the annual growth in house prices for first-time buyers increasing from an average of -14.6% in May, to -11.7% the following month.

Following the results, the department announced plans to safeguard shared ownership schemes in areas where replacing affordable housing is difficult, to ensure future buyers have the chance to step on to the property ladder.

Generally, shared owners can staircase up to full ownership, but in some rural areas it is difficult to replace homes that become fully owned and are subsequently sold on the open market.

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Now more than 13,000 small rural settlements will be designated ‘protected’ areas across England. These will be areas where land to build new affordable homes is severely limited or where it is not possible to buy existing properties for shared ownership because of the small size of the housing market.

Housing Minister Ian Austin said the scheme would boost the number of properties available.

He added: “We simply can’t afford to lose shared ownership homes in areas where they are difficult to replace.”