House prices in the UK rose by 0.4 per cent in August, against a 0.1 per cent drop in July, according to the Halifax.

However, the latest house price index from the mortgage lender warns of a “more challenging period ahead”.

The annual rate of growth eased to 11.5 per cent from 11.8 per cent and a typical UK property now costs a record £294,260. 

Wales has the highest annual house price inflation, up by 16.1 per cent, the strongest level of growth since early 2005. This means average prices have risen by £31,246 over the last year, with an average property now costing £224,858.

The South West of England also continues to record a strong rate of annual growth, up by 14.5 per cent with an average property cost of £313,003.

Kim Kinnaird, director of Halifax Mortgages, says: “While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity.

“Firstly, there is the considerable hit to people’s incomes from the cost-of-living squeeze … while government policy intervention may counter some of these impacts, borrowing costs are also likely to continue to rise, as the Bank of England is widely expected to continue raising interest rates into next year.

“With house price to income affordability ratios already historically high, a more challenging period for house prices should be expected.”

Tom Bill, head of UK residential research at Knight Frank, comments: “The supply of houses tightened over the summer as more people took a summer holiday for the first time in three years, which kept prices buoyant.

“We expect more properties to be listed in the coming weeks as we move from a seller’s towards a buyer’s market. Together with rising mortgage rates, this will increase downwards pressure on prices after they have appeared to defy gravity for so long.”

Here are average house prices in August and the annual percentage increase, according to Halifax:

– East Midlands, £244,378, 12.0%

– Eastern England, £343,507, 11.6%

– London, £554,718, 8.8%

– North East, £169,721, 9.6%

– North West, £229,182, 13.7%

– Northern Ireland, £185,505, 12.5%

– Scotland, £204,362, 9.4%

– South East, £400,528, 12.1%

– South West, £313,003, 14.5%

– Wales, £224,858, 16.1%

– West Midlands, £253,871, 13.5%

– Yorkshire and the Humber, £207,636, 12.2%.