Values grew by 0.4% last month after falling by 0.1% in July with the average home reaching a new record high of £294,260, according to Halifax.

Meanwhile, annual price increases cooled slightly to 11.5%, from 11.8%.

Wales topped the list with house prices rocketing by 16.1% annually. Average prices in the nation have jumped by £31,246 over the past year.

The South West also had bumper growth of 14.5%. And London’s price increases have reached their highest level in six years at 8.8%.

Cost-of-living crisis to hit house prices

Experts widely expect house price growth to dampen in the coming months as higher interest rates and the cost of living stretch household finances.

Kim Kinnaird, director at Halifax Mortgages, said: “While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity.

“Firstly, there is the considerable hit to people’s incomes from the cost-of-living squeeze. The 80% rise in the energy price cap for October will put more pressure on household finances, as will the further increases expected for January and April. At the levels being predicted, this is likely to constrain the amounts that prospective homebuyers can afford to borrow, on top of the adverse impact of higher energy prices on the wider economy.

“While government policy intervention may counter some of these impacts, borrowing costs are also likely to continue to rise, as the Bank of England is widely expected to continue raising interest rates into next year.

“With house price to income affordability ratios already historically high, a more challenging period for house prices should be expected.”

‘A cooling market’

Tomer Aboody, director of property lender MT Finance, added: “As the rate of house price growth slows, we are seeing clear signs of a market that is cooling. Buyers are still active and looking to purchase but are now more selective and calculated in their offers, taking into consideration higher mortgage rates, higher inflation and higher energy costs. Sales are happening but at a slower pace.

“As the market continues to take shape going forward, a possible government intervention is needed to restructure stamp study, allowing and helping buyers to get on the ladder and reducing the pain of higher mortgage rates a little.”