The regions which have benefited most from the property boom are to lead the market into a slowdown according to the Nationwide, whose monthly mortgage report published today reported "subdued" house price growth.

The value of the average home rose by 0.2 per cent over September. While higher than the 0.1 per cent recorded for August, the figure is much more modest than the 2.1 per cent growth recorded for April.

On an annual basis, property price inflation fell to 17.8 per cent from 18.9 per cent in August.

"House price growth remained subdued," Alex Bannister, the Nationwide group economist said.

The data come amid growing evidence of a market slowdown, with the Bank of England yesterday reporting a fall in the number of mortgage approvals to its lowest level for nearly four years.

"Activity is set to remain at lowest levels over coming months as home purchasers continue to adopt a cautious stance," Mr Bannister said.

The fall in deals would be reflected in weaker price growth, with the areas which have enjoyed the most rapid price increases to suffer the steepest downturns.

"Going into 2005, we expect continued subdued price growth with the faster growing regions, such as the North and Wales. Seeing the sharpest slowdown in price growth," he said.

Prices in the North, North West and Wales were the "most stretched and therefore the most vulnerable to a significant slowdown".

However, Mr Bannister said that the market was not poised to crash.

"Given the positive outlook for the economy and the jobs market in particular, we expect the market to tread water rather than experience a sustained widespread slump in prices," he said.

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