The average UK house price shrank in September, after hitting a record high the previous month.
A typical British property now costs £293,835, figures compiled by the bank Halifax show, after prices fell by 0.1 per cent.
The annual rate of house price growth also slowed to 9.9 per cent in September from 11.4 per cent in August, returning to single digits for the first time since January.
But figures going back to the summer indicate the housing market may have already entered a more sustained period of slower growth, Halifax said.
Kim Kinnaird, director at Halifax Mortgages, said house prices have been “largely flat” since June, up by about £250.
"This compares to a rise of more than £10,000 during the previous quarter, suggesting the housing market may have already entered a more sustained period of slower growth,” she said.
"Predicting what happens next means making sense of the many variables now at play and the housing market has consistently defied expectations in recent times.
"While stamp duty cuts, the short supply of homes for sale and a strong labour market all support house prices, the prospect of interest rates continuing to rise sharply amid the cost-of-living squeeze, plus the impact in recent weeks of higher mortgage borrowing costs on affordability, are likely to exert more significant downward pressure on house prices in the months ahead”
She said this will “undoubtedly be a cause of some concern for homeowners,” but the unprecedented rate of property price inflation seen in recent years has been “far above” the historic average.
"It's important to look at slower growth in this context — since the start of the pandemic average property values have risen by around 23 per cent [nearly £55,000] with detached house prices up by more than £100,000 over the same period,” she added.
The number of mortgage products available fell sharply following the recent mini-budget and as product choice has gradually returned, lenders have been pricing their mortgage deals upwards.
The average five-year fixed rate mortgage and the average two-year fix breached 6 per cent this week ― the first time this has happened in more than a decade ― according to data from Moneyfacts.co.uk.
Households are now paying the greatest portion of their income on mortgage payments since 1989, according to experts.
Looking across the UK, annual house price growth is strongest in Wales, at 14.8 per cent.
Meanwhile, in Scotland, London, Eastern England and the North East of England, annual house price inflation fell to single-digit levels.
The West Midlands has overtaken the South West to record the strongest rate of annual growth in England, with house prices rising by 13.3 per cent over the past year.
Alice Haine, a personal finance analyst at Bestinvest, said: "While the pace of mortgage rate rises has accelerated since the mini-budget, the situation is not a complete surprise.
"Mortgage costs have been increasing steadily since December when the Bank of England first started pushing up its base rate from a record low of 0.1 per cent in a bid to curb runaway inflation.
"The base rate now sits at 2.25 per cent, with expectations it might jump up to 1 per cent at the Monetary Policy Committee meeting next month, pushing up mortgage rates once again."
Matthew Thompson, head of sales at Chestertons, said the estate agent is "encountering an increasing number of house hunters who want to secure a property as soon as possible and take out a fixed-rate mortgage".
He added: "This has contributed to September's property market remaining busy and competitive. As the cost-of-living crisis is looming, some buyers are compromising on their priorities in order to secure a property under their initial budget."
Martin Beck, chief economic adviser to the EY Item Club, said the weakening economic outlook and squeezed household incomes, means property values could fall by 5 per cent or more over the next year or so.
Nicky Stevenson, managing director at estate agent Fine & Country, said sterling's weakness provides a window of opportunity for foreign investors, adding: "In higher value market areas like London, significant savings can now be made compared with the start of the year and we are already seeing a spike in interest from overseas."