Annual house price growth was already slowing before last week's chaos in the mortgage market threatened to seriously derail the housing market, new figures have shown.
House prices rose 9.5pc in the year to September, down from 10pc in August, according to Nationwide Building Society’s monthly house price index.
Graham Cox, a mortgage broker, said the "worm has turned" and predicted house price falls of 20pc over the next two or three years.
He said: "The events of the past week have fundamentally changed the mortgage market.
"It's a buyers' market now."
London was the region with the lowest increases, at 6.7pc annual growth in the last quarter.
Month on month there was no rise in house prices at all.
The slow in growth did not take into account recent market chaos following the mini-budget last week, which saw spooked lenders pull thousands of mortgage deals as the value of the pound plummeted.
Nationwide warned affordability was becoming more stretched with first-time buyer deposits as a proportion of salaries at a record high.
The data found 10 of the 13 regions of the UK saw slower growth between July and September than in the spring.
Tomer Aboody, of MT Finance, a lender, said rates increasing at record levels would trigger a “shift in sentiment” as prospective buyers decide to wait until they are “well within their means” to make a purchase.
However, prime properties in London should retain their values, he said, “as foreign buyers look to take advantage of the weaker pound.”
Nationwide said the number of mortgages approved for house purchase had remained below pre-pandemic levels adding that surveyors were reporting a decline in new buyer inquiries.
Chancellor Kwasi Kwarteng's stamp duty cut could provide “some support to activity and prices”, it said.
But Mr Gardner added: “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.”
Prices in the South West remained the strongest, according to the report, although growth had still dropped from 14.7pc to 12.5pc. In the East Midlands, price growth rose from 11.4pc to 12.3pc.
The data found London to be the weakest performing region, despite a modest rise in house price growth, from 6pc to 6.7pc.
The average price of a property in the capital is £534,545 – almost double the national average of £273,135.
Jonathan Hopper, of Garrington Property Finders, said the coming months would likely see price inflation cool.
“So far there are twitches rather than tremors,” he said. “But the formerly boundless confidence and momentum of the property market are being shaken.
“The dynamics are shifting, and increasing numbers of buyers are either pausing for thought or playing hardball on what they’re willing to pay.”