House price rises continue to slow

The increase was down from a rise of 0.5% in August and a jump of 2% in July and left the average cost of a home in the UK at £220,111, according to the Department of Communities and Local Government.

The annual rate of house price inflation also slowed to 10.8%, down from 11.3% in August and a 28-month high of 12.3% in July.

At the same time some property types actually saw price falls, with the average cost of a terraced house dropping by 0.2% during the month, although this was more than offset by a 1.2% increase in the average price paid for flats.

The price of bungalows rose by 0.3% during the period, while the average cost of a detached house remained broadly unchanged, increasing by just 0.1%.

The Department of Communities and Local Government (DCLG) figures tend to lag behind other data on the housing market as they are based on mortgage completions rather than approvals, but the numbers still add to growing evidence that the property market is finally slowing down.

Britain's biggest mortgage lender Halifax said last week that house prices dropped by 0.5% during October, following a 0.6% slide in September, as the market responded to the five interest rate rises seen since August last year.

The Royal Institution of Chartered Surveyors said the cost of property fell at its fastest rate for two years during September, while the number of people looking to buy a new home dropped for the 10th month in a row. But Nationwide Building Society said prices rose by 1.1% in October, bucking the slowing trend reported by other indexes.

Howard Archer, chief UK and European economist at Global Insight, said: "The DCLG data adds to the overall impression that housing market activity and prices are now losing significant momentum in the face of slowing activity, increased affordability pressures and tightening lending practices.

"We expect these factors to increasingly bite over the coming months, leading to further marked cooling in the housing sector."