The cost of the typical three bedroom semi is now £189,333 - up £15, 678 over the last year - and the 0.5 per cent rise recorded in October reverses a 0.1 per cent drop seen in September.

Annually values rose nine per cent, but this was down from the 9.4 per cent seen in September and shows a cooling market in the run up to Christmas, found the Nationwide.

Jonathan Hopper, managing director of property search consultancy Garrington, said: "Although prices were up again in October, the general consensus is that the market has cooled.

"Mortgage applications are down, London has calmed after a frenzied buying period and with more properties being marketed, issues over constrained supply have eased.

"The market has become far more price sensitive in recent weeks, and in many parts of the country the negotiating stance being adopted by sellers has softened.

"At the same time, buyers are taking their time again, viewing multiple properties, and not feeling pressurised into making a quick and rash decision.

"The overall picture is that of much more sensible, much more controlled market.

"Consumer confidence is high, lenders have an appetite to lend and concerns over early interest rate rises have subsided.

"The market was running away from itself earlier in the year, and now it feels like the madness has been reigned in.

"As we get closer to Christmas, transaction levels do drop off.

"By January, we'll have a much clearer picture where the market is going next."

The slowdown, after a year of soaring house price growth in the South East and London and strong recovery in other parts of the UK, like the North West, has been driven by tougher lending rules.

Nationwide has reported that mortgage approvals in September were 20 per cent down on levels at the start of the year when the market recovery was in full swing.

The Mortgage Market Review, which came into force in April, and the Bank of England's efforts to cap the number of high loan to value products, introduced in June, have restricted lending, while the threat of interest rate rises next year has also dampened demand.

Over-inflated house prices have also deterred would-be buyers.

"A variety of indicators suggest that the market has lost momentum," said Robert Gardner, Nationwide's chief economist.

"The number of mortgages approved for house purchase in September was down and some forward looking indicators, such as new buyer enquiries, suggest that activity may soften further in the near term, especially in London."

The Nationwide data follows Land Registry findings for September, out earlier this week, which reported a decline in the average UK house price of 0.2 per cent with a 0.7 per cent drop in London.

The report also showed that despite the high proportion of new mortgage lending on fixed rates, the majority of outstanding mortgages - around 60 per cent - is on variable interest rates.

This is a marked shift from the pre-crisis period where the proportion of mortgages on variable rates was 38 per cent.

Moreover, the majority of recent fixes are for relatively short time periods - 62 per cent are for two years and around 30 per cent for five years.

Howard Archer, chief economist for IHS Global Insight, added: "Significant restraint on house buyer interest is expected to come from more stretched house prices to earnings ratios, the prospect that interest rates will eventually start to rise in 2015 and tighter checking of prospective mortgage borrowers by lenders."

However latest mortgage research from Mortgage Advice Bureau, which analyses over 250,000 mortgage, found the average income of a borrower looking for a mortgage has jumped 21 per cent in a year, suggesting the new affordability measures introduced by the MMR means buyers with better financial resources are coming forward.

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