On a monthly basis, prices were flat in October, compared to 0.2% in September, according to the latest data from Nationwide.

Average prices dropped slightly to £214,534 in October, compared to £214,922 a month earlier.

Robert Gardner, Nationwide’s chief economist, said this was in line with expectations, as the squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand. This is despite borrowing costs remaining low by historic standards and the unemployment rate standing at a 40-year low.

He said: “We continue to expect house prices to rise by around 1% over the course of 2018. Looking further ahead, much will depend on how broader economic conditions evolve. If the uncertainty lifts in the months ahead, there is scope for activity to pick-up throughout next year.

“The squeeze on household incomes is already moderating and policymakers have signalled that interest rates are only expected to raise at a modest pace and to a limited extent in the years ahead.”

Housing market activity still relatively soft

Gardner revealed that housing market transactions remain relatively subdued, with 1.2 million transactions in the 12 months to September 2018.

This figure is 30% lower than the levels seen in the same period in 2007.

He added: “There has been a significant change in the pattern of housing transactions over the past decade. In the immediate aftermath of the financial crisis, cash transactions proved more resilient.

“This is because cash buyers were less impacted by the tightening in credit conditions and the deterioration in labour market conditions, which reduced the number of people able to buy with a mortgage.

“Recent years have seen a recovery in first-time buyer transactions, which are now broadly in line with pre-crisis levels. The improvement in credit availability, historically low interest rates, together with a steady improvement in labour market conditions in recent years have all helped boost activity.

“There has been a significant reduction in the number of buy-to-let purchases involving a mortgage in recent years, which reflects a softening in demand following tax changes and differences in underwriting standards.”