The housing market is showing “tentative” signs of slowing down, according to Nationwide.
House prices have risen by their smallest monthly amount since March, and mortgage approvals appear to have peaked, the lender announced last week.
The picture is far from conclusive, with the Nationwide figures also showing that the annual rate of house price growth is now running at 24%, the highest since spring 1989.
House price to earnings ratio is almost back to its peak, also from 1989, which Nationwide says the market is “overstretched” and heading for a fall.
Last month's 1.4% rise in prices lifted the average cost of a property to £113,665. This rise compared with increases of around 2% to 3% in the April to September period.
Nationwide group economist Alex Bannister says: “The housing market remains strong with prices up 6% over the last three months and sales up 12% year-on-year. However, October's 1.4% rise was the smallest increase since March.”
Separate Bank of England data shows that the number of mortgages approved by banks and building societies is down from the highs seen earlier in the year. Bannister adds: “This, combined with weaker anecdotal evidence suggests the market may be beginning to cool.”
Affordability problems remain acute in the capital, where first-time buyers need to earn almost twice the London average wage to climb on to the first rung of the property ladder. By contrast, first-timers in north-west England need only earn 86% of the region's average wage.
High-profile job losses in the finance and business sector may also be having a direct and indirect impact on the housing market in the south-east.
Bannister says: “However, interest rates remain supportive and could be cut further if the Monetary Policy Committee feared that its inflation target was at risk from a reduction in confidence in the housing market.”