According to Nationwide, house prices defied gloomy expectations and showed another gain in September, but the trend growth of house prices is now the lowest since July 2006.

Credit conditions are now clearly tightening for leveraged borrowers. The interest rate outlook has shifted from hawkish to dovish, which could provide some welcome relief to homeowners next year.

Fionnuala Earley, Nationwide’s chief economist, said: “House prices recorded a reasonably strong gain of 0.7% between August and September, seemingly shrugging off the unsettled events of the past month. Despite this increase, the 12-month rate of house price inflation came down from 9.6% in August to 9.0%, as we are now entering a period during which house prices gains were particularly strong in 2006. This brought the average price of a typical UK property to £184,723.

“The 3-month on 3-month rate of price growth – often the smoothest indicator of underlying momentum – slowed from 2.0% to 1.6%, the lowest level since July 2006. Overall, house prices defied the gloomy predictions of some recent headlines, but their underlying growth is still on a decelerating trend.”