The average house in September cost £293,835, which is marginally down from August’s record high of £293,992, according to the Halifax house price index.

It noted monthly prices contracted by 0.1%, which is the second decrease over the past three months.

From a regional perspective, 11 out of 12 areas reported slower growth than August, the exception being North East.

There were nine UK nations and regions where annual house price growth fell to single digits, including Eastern England, Greater London, the North East and Scotland.

Wales reported the strongest annual house price growth at 14.8% with the average property price coming to £224,490.

West Midlands has the strongest rate of growth in England at 13.3%, with the average property costing £255,822.

Annual house price growth in Northern Ireland was pegged at 10.9% and Scotland came to 8.5%. Average prices came to £184,570 and £204,305 respectively.

London has the lowest annual house price growth at 8.1% but the average house price was £553,849.

House prices ‘largely flat’ since June

Kim Kinnaird, director of Halifax Mortgages, said that the events of the past few weeks have led to “greater economic uncertainty” but, in reality, house prices have been “largely flat” since June, rising by around £250.

This compares to an increase of £10,000 in the prior quarter, which Kinnaird suggested meant the housing market had “already entered a more sustained period of slower growth”.

She said: “Predicting what happens next means making sense of the many variables now at play, and the housing market has consistently defied expectations in recent times.

“While stamp duty cuts, the short supply of homes for sale and a strong labour market all support house prices; the prospect of interest rates continuing to rise sharply amid the cost-of-living squeeze, plus the impact in recent weeks of higher mortgage borrowing costs on affordability, are likely to exert more significant downward pressure on house prices in the months ahead.”

Kinnaird continued: “This will undoubtedly be a cause of some concern for homeowners, but the unprecedented rate of property price inflation we’ve seen in recent years has been far above the historic average.

“It’s important to look at slower growth in this context – since the start of the pandemic average property values have risen by around plus 23%, almost £55,000, with detached house prices up by more than £100,000 over the same period.”

House price analysis: Buyers ‘pausing for breath’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that new buyers were “pausing for breath” while they consider the likely pace and size of future interest rate hikes, leading to a fall-off in activity.

He added: “The question is whether worries about rising mortgage payments outweigh the benefits of the recent stamp duty reduction, particularly for first-time buyers.

“The mini Budget sparked a chain reaction of unintended consequences raising buyer concerns that any savings in stamp duty and other taxes would be more than offset by mortgage rates rising much more quickly and higher than expected.”

Emma Cox, MD of real estate at Shawbrook, added that high inflation and rising interest rates had led to a surge in interest rates creating a “challenging backdrop for prospective house buyers”.

She continued that the introduction of stamp duty reform offered a “glimmer of hope” for people in the process of buying a property but many would be “waiting to see which way the wind turns before committing to buy.”

Cox added: “Against an uncertain political and economic backdrop, house prices are likely to continue to be affected, at least in the short-term. More needs to be done to alleviate cost of living concerns and restore consumer confidence, on top of solving long-term supply issues.

“With many still reliant on the private rental sector, it’s vital that landlords are supported and encouraged to provide quality, safe and sustainable properties.”

Meanwhile, Avinav Nigam, co-founder of real estate investment platform Immo, said the firm was seeing property listings falling by 15-20% as uncertainty has encouraged owners to delay transaction decisions.

Nigam said: “It’s predicted that house prices could correct by as much as 7-10% in coming months. However, we don’t expect a house price growth reversal to improve the affordability of housing much due to fast rising interest rates. Mortgage lenders are starting to require consumers prove they can afford 7% interest rates, as an indication of where rates could go.”

Mortgage payments could double

Tomer Aboody, director of property lender MT Finance, said that as average mortgage rates hit 6%, they could stabilise around 4% over the next couple of years. However, for those coming to the end of two or five-year fixed rates deals, they could find their mortgage payments double.

“That will be a big hit to absorb in the family finances,” he added.

Aboody continued: “There are hard times ahead and many people may have to downsize because they can’t afford the home they bought when interest rates were at rock-bottom. Stamp duty reductions targeted at those who need to sell and find something smaller would make a lot of sense.”