House prices edged ahead by 0.3 per cent in September, suggesting that the market continues to cool, according to Government figures released today.

The modest September rise was sharply down from the 2 per cent hike recorded in July and a 0.5 per cent increase in August.

The average cost of a home in the UK now stands at £220,111, the Department of Communities and Local Government said.

The latest data means the annual rate of house price inflation slowed to 10.8 per cent, down from 11.3 per cent in the previous month.

The Government figures, based on mortgage completions rather than approvals, lag other data on the housing market and add to mounting evidence that property price increases are slowing.

Britain’s biggest mortgage lender Halifax said last week that house prices dropped by 0.5 per cent in October, following a 0.6 per cent slide in September. The slowdown follows five interest rate rises seen since August last year.

Meanwhile, the Royal Institution of Chartered Surveyors said that 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 tenth month in a row.

However, data has been mixed, with Nationwide reporting that prices rose by 1.1 per cent in October, bucking the slowing trend reported by other indexes.

Howard Archer, the chief UK and European economist at Global Insight, said: “The DCLG data add 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.”

The rate of annual house price growth slowed in all but two of the UK’s 12 economic regions during September, according to the DCLG.

The North East and South East were the only regions to buck the trend, with annual house price inflation increasing to 7.5 per cent and 11.5 per cent in these regions respectively.

Northern Ireland continued to have the strongest rate of annual growth at 42.7 per cent, although it fell for the third month in a row.

In London, widely regarded as the powerhouse of the property market, annual house price inflation eased from 17.2 per cent to 16.5 per cent.

Across the country, first-time buyers are paying around 11.8 per cent more to get on to the property ladder than they were in September last year, at an average of £167,503.

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