House price growth stalled month-on-month in September, but property values were still 9.5% higher than a year earlier, according to an index.

Estate agents said that there could be some re-negotiations amid a backdrop of rising interest rates – and if this turns into a trend it could soften house prices.

Across the UK, the average house price in September was £272,259, Nationwide Building Society said.

Property values recorded 0.0% growth month-on-month, following a 0.7% monthly increase in August.

The annual price increase of 9.5% was slightly more modest than a 10.0% annual increase recorded in August.

Robert Gardner, Nationwide’s chief economist, said: “In September, annual house price growth slowed to single digits for the first time since October last year, although, at 9.5%, the pace of increase remained robust.

“Prices were unchanged over the month from August, after taking account of seasonal effects. This is the first month not to record a sequential rise since July 2021.

“There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer inquiries.

“Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm.”

Stamp duty cuts were made in last week’s mini-budget.

However, many mortgage products have been pulled in recent days amid economic uncertainties and lenders have been pricing their mortgages upwards, spelling higher costs for borrowers.

Mr Gardner said: “By lowering transaction costs, the reduction in stamp duty may provide some support to activity and prices, as will the strength of the labour market, assuming it persists, with the unemployment rate at its lowest level since the early 1970s.

“However, headwinds are growing stronger suggesting the market will slow further in the months ahead. High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.

“Housing affordability is becoming more stretched. Deposit requirements remain a major barrier, with a 10% deposit on a typical first-time buyer property equivalent to almost 60% of annual gross earnings – an all-time high.

“Moreover, the significant increase in prices in recent years, together with the significant increase in mortgage rates since the start of the year, have pushed the typical mortgage payment as a share of take-home pay well above the long-run average.”

Nationwide also released quarterly house price figures showing movements across the UK.

Mr Gardner said the South West of England remains the strongest-performing region “even though it saw a slowing in annual house price growth to 12.5%, from 14.7% in (quarter two).”

He added: “Wales saw annual price growth slow to 12.1% but remained the top-performing nation.

“Price growth in Northern Ireland softened to 10.1%. Meanwhile, Scotland saw a further slowdown in annual growth to 7.8%, compared with 9.5% last quarter.”

Nathan Emerson, chief executive of estate and letting agents’ body Propertymark, said: “Our own data from our estate agent members across the UK shows the number of new homes and buyers coming to the market is up year-on-year, which will underpin stability.

“With interest rate rises, we could start to see some re-negotiations if mortgage offers expire during the conveyancing process, which is currently taking over 17 weeks on average.

“A trend of re-negotiation would start to soften house prices as those final sale prices are used by agents to create comparable evidence for the valuing of new properties entering the market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “So much has changed even since the beginning of September.

“Lenders have been pulling fixed-rate mortgages left, right and centre as swap rate volatility makes them extremely difficult to price.

“Many of the smaller lenders in particular are waiting to see what the market does before relaunching.”

He added: “Borrowers concerned about their mortgage should seek advice from a broker as to the options available and plan ahead as much as possible.”

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The latest data from Nationwide suggest the staggering jump in mortgage rates finally is starting to weigh on buyer demand.

“The increase in the stamp duty land tax threshold to £250,000, from £125,000, will do little to offset affordability issues caused by the upcoming surge in mortgage rates.”

Tomer Aboody, director of property lender MT Finance, said: “We will see a shift in sentiment and the move to a buyers’ market, rather than sellers calling the shots.

“Prime properties, especially within the London area, should sustain values, as foreign buyers look to take advantage of the weaker pound.”

Andrew Montlake, managing director of mortgage broker Coreco, said: “The days of double-digit growth may not return for a long time.

“The level of uncertainty in markets, and being felt by consumers, is off the charts. The brief surge in sentiment caused by the stamp duty announcement on Friday has been wiped out by the tsunami of market volatility since.

“There’s no doubt now that a lot of prospective buyers will either have to look at smaller homes due to the sharply increased mortgage rates they are now looking at, or will shelve their plans altogether and wait until there is more clarity and things have calmed down.

“Prices will without doubt come under real pressure now, but the sizeable drops some have predicted are unrealistic given the lack of supply. Prices are far more likely to flatline than go through the floor.”

Ross Boyd, founder of mortgage comparison platform Dashly.com, said: “After the chaos of the past week, the level of uncertainty in the property market is off the scale.”

Here are average house prices in the third quarter of this year, followed by the annual increase, according to Nationwide:

– South West, £321,725, 12.5%

– East Midlands, £241,699, 12.3%

– Wales, £213,684, 12.1%

– West Midlands, £247,120, 12.0%

– North West, £212,998, 11.3%

– East Anglia, £289,266, 11.2%

– Yorkshire and the Humber, £209,261, 11.0%

– Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £353,276, 10.4%

– Northern Ireland, £183,960, 10.1%

– Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £435,709, 8.3%

– North East, £159,309, 8.1%

– Scotland, £184,496, 7.8%

– London, £534,545, 6.7%