Britain's long-running hike in house prices has shown "tentative" signs of slowing, according to figures from the Nationwide mortgage lender.

High profile job losses in the financial sector may also be having both a direct and indirect effect on the housing market

Alex Bannister, Nationwide

Nationwide said house prices rose by 1.4% in October, a figure it described as "undeniably robust", but it was the lowest increase since March.

The mortgage lender predicted that house prices would steady over the next 12 months, as affordability became a problem for first-time buyers.

Nonetheless, house prices overall are still 24% higher than October last year.

	:	UK property market
The house price boom

Redundancy blow

Nationwide said the number of mortgage approvals, a key indicator of activity within the housing market, also appears to have peaked.

"Bank of England data shows that both gross approvals and the number of approvals for house purchase are down from the highs seen earlier in the year"

"This combined with weaker anecdotal evidence suggests the market may be beginning to cool."

Affordability in some parts of the market is already acting as a brake on price increases

Alex Bannister, Nationwide

Regional variations showed a marked slowdown in house prices in the traditionally booming market of London and the south east of England.

Alex Bannister, an economist for Nationwide, attributed this to the high number of redundancies in the financial sector and the difficulty first-time buyers have in raising the necessary deposit.

"High profile job losses in the financial sector may also be having both a direct and indirect effect on the housing market - the latter coming through via the negative impact on job security and consumer sentiment"

"This and the slide in equity markets are likely to be behind the apparent slowdown in the upper end of the London market."

Coming back in line

Mr Bannister said rate of price increases is now expected to "moderate" over the next 12 months.

"Affordability in some parts of the market is already acting as a brake on price increases and this situation is unlikely to change in the short term," he said.

The survey suggested that first-time buyers in London need to be earning twice the average London salary to afford the first step on the property ladder.

However, the mortgage group said the recent slowdown has brought UK house prices back to where they would have been if they had risen in line with earnings after the housing boom of the late 1980s.

The current difference is that low interest rates are allowing homeowners to meet their repayments more easily.

"Clearly the sustainability of this relies on nominal interest rates not rising significantly in the future," said Nationwide.