“UK house prices increased by 0.5% in September, with the annual pace of house price growth picking up to 3.8%, from 3.2% in August, the Nationwide Building Society has reported.

The average price (not seasonally adjusted) of a home is now £195,585.

“The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth,” explained Robert Gardner, Nationwide’s chief economist. “However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.

“Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead.”

Gardner said that the slowdown in house price growth since the middle of 2014 has not been confined to, nor has it been driven primarily by, developments in London. Indeed, the capital has continued to see price growth at or above the rate in the UK overall over the past four quarters. The annual rate of price growth in London is currently the highest in the country and actually accelerated to 10.6% in Q3, up from 7.3% in Q2.

He said: “The gap between London house prices and the rest of the UK has continued to reach new highs (see chart below). The price of a typical home in the capital (£443,399 on our measure) is more than double the UK aggregate and more than three and a half times the price of the typical property in the cheapest UK region (the North of England).

“Taking a wider view, regional house price performance was mixed in Q3. Eight UK regions recorded a slowdown in the annual rate of growth, while five saw acceleration. Most parts of the country continued to see annual house price gains – the exceptions were Scotland and the North West which both recorded small declines.”