House prices were up 7.5% on the year, but the underlying rate of increase in house prices has slowed sharply, "reflecting a weakening of activity which has gathered pace in recent months," the Nationwide said in its latest monthly UK housing market survey.

House buyers have lost confidence in the market

However, the building society believes that a "sustained decline" in prices is unlikely.

The Nationwide blamed the downturn in the market on the inflation and a loss in consumer confidence.

Nationwide's head of research, Paul Sanderson, said: "The slowing in the market is hardly surprising. Price inflation in London and parts of the south-east had risen to unsustainable levels and some correction was inevitable."

Nationwide ruled out any rebound in the housing market in the short term.

The average price of a house in October was £66,123 in October, up from £65,948 in September.