The Nationwide has reported that UK house prices fell by 0.2% in September, following 16 consecutive monthly price rises.

Consequently, the annual pace of house price growth moderated to 9.4% from 11% in August.

While September saw a slowing in house price growth, the picture on a quarterly basis (July, August and September combined) was still relatively strong, with all 13 UK regions recording annual price gains.

There remains significant regional variation however, with the South of England still seeing the strongest rates of growth.

Annual house price growth in London slowed somewhat, from 25.8% in Q2 to 21% in Q3. Nevertheless, at £401,072, average prices in the capital reached a record high, 31% above their 2007 peak. In the UK as whole, prices are around 2% above their pre-crisis peak (excluding London they are less than 1% above their 2007 peak).

Robert Gardner, Nationwide’s chief economist, said: “Price growth may soften further in the final quarter of the year, given the high base for comparison from Q4 2013. However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust.”

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “Just as the house price rollercoaster appeared to be reaching its peak, the latest figures suggest the brakes are starting to be applied as the rate of growth settles into a more sedate pace. The effects of the Mortgage Market Review (MMR) are finally starting to bed in, ushering in a more relaxed pace of activity and providing welcome respite for potential buyers who have been faced with 16 consecutive months of house price rises.

“Monthly house price changes are volatile, and it will be a while before we are able to paint a full picture of the housing market post-MMR. However, the more detailed affordability checks imposed by MMR should slow down the turnover of mortgage applications and temper demand, ultimately leading to a reduced rate of house price growth. That’s not to say that the market won’t still be healthy: both consumer and lender confidence is strong, leaving plenty of room for further recovery.

“Affordability is a key concern for many first-time buyers, so even if house price growth does start to slow, it is vital that there is still plenty of financial support available for those who need it. The continuation of government schemes such as Help to Buy and wider availability of 95% mortgage lending remains crucial in helping those who can only afford a small deposit onto the housing ladder. The construction industry must also ramp up production of new homes to ensure the dangerous imbalance between supply and demand is corrected.”