A soft landing for the British property market appears in prospect, according to the Nationwide and the British Bankers' Association.
Without the full effects of the credit squeeze yet feeding through to the housing market, prices and the volume of mortgage lending have moderated over the past couple of months.
The figures are in line with other data which, stressing the fact that most of it predates the credit crunch, suggests that homeowners will be facing the most gentle of declines in their fortunes.
The number of mortgages approved for home purchase in Britain fell 14.2 per cent in Aug-ust from a year earlier, the British Bankers' Association said, with the value of gross mortgage lending just 1 per cent higher than in August last year.
The disparity between the number and value of mortgages suggest that, as in the United States, homeowners are willing to wait longer for the "right" price, and that real-estate values remain relatively robust.
Indeed, figures from the Nat-ionwide building society showed house prices rose by 0.7 per cent in September, more than economists expected, and in the context of five quarter-point increases in base rate since August 2006.
It was the strongest gain since April this year, and leaves the average British property costing £184,723. But the underlying trend was more muted, with annual house price inflation dropping to 9 per cent, its lowest level for nearly a year.
Fionnuala Earley, Nationwide's chief economist, said: "Overall, house prices defied the gloomy predictions of some recent headlines, but their underlying growth is still on a decelerating trend.
"Higher wholesale funding costs are now clearly leading to a reassessment of the pricing of credit in the mortgage market. As expected, this has not had an immediate impact on house prices, but the longer-term effect will undoubtedly be to take some of the froth out of themarket."
The five major UK house price indices show an average of 11.1 per cent annualised growth for the 12 months to August 2007.
Howard Archer, chief UK and European economist at Global Insight, said: "Going forward, housing demand seems set to lose significant momentum as it is increasingly pressured by affordability stemming from higher interest rates, modest real disposable income growth and elevated house prices.
"Mortgage rates are rising further as a consequence of the liquidity crunch, pushing up money market interest rates, while the Northern Rock crisis may hit confidence and increase consumers' wariness about buying a house."Reuse content