House price growth has finally peaked and will tail off this winter, new figures show.
Halifax said house price inflation appeared to have hit a ceiling over the summer and would continue to slow over the coming months.
The lender reported prices grew by 9.6 per cent in the three months to September, compared with the same period a year ago.
This compares to 9.7 per cent in August and 10.2 per cent in the three months to July.
The mortgage lender said the market ‘may have peaked’ during July’s double-digit rise – the largest since before the economic crisis.
House price growth has peaked and will tail off this winter, with prices in some areas now ‘unsustainable’, according to new figures
Economists said the data suggested prices had hit an affordability ceiling, with prospective buyers ‘baulking’ at the prices being demanded.
In parts of London, houses have risen by almost 30 per cent in the last year, pushing home ownership out of reach for millions of people.
Martin Ellis, housing economist at Halifax, suggested that such prices may have now become ‘unsustainable’ in the capital.
He said: ‘The recent rapid rise in house prices in some parts of the UK, earnings growth that remains below consumer price inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand.
‘A moderation in growth looks likely during the remainder of 2014 and into next year as supply and demand become increasingly better balanced.’
But while prices in London may have become unaffordable, the market could cope with further growth elsewhere in the UK, he said.
He said: ‘In parts of London and the south-east, we may have hit a ceiling because that is where we have seen prices rising dramatically.
‘In the rest of the country, we are seeing more solid house price growth, which could be sustainable for longer.’
Matthew Pointon, a property economist at Capital Economics, said: ‘It is unlikely buyers will be willing or able to accommodate yet another burst of house price inflation, which suggests we are set for a prolonged period of far more subdued house price gains.
‘Potential buyers are baulking at the prices sellers are now demanding’.
This graph shows the huge difference in house prices between London and the rest of England and Wales
In August, Halifax, which is part of Lloyds Banking Group, found more than half of homeowners believed it would be a good idea to sell within a year.
They reported a growing ‘sentiment towards selling’ as people realised the market may have peaked.
Jonathan Hudson, founder of West End estate agent Hudsons Property, said: ‘There are now certainly better hopes for buyers out there.
‘No longer are there huge numbers fighting over the same property forcing quick and sometimes rash decisions.
‘For serious buyers looking to get on the ladder, now is the time to buy while the market catches breath.’
The findings came as a report from property website Zoopla found that home owner confidence in the continued growth of UK house prices has fallen to its lowest levels in 15 months.
A survey of more than 6,700 home owners for Zoopla found that 88 per cent of people expect property prices to increase in their area in the next six months, falling from 92 per cent three months ago.
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