Nationwide: London prices up 21pc

This reflects a slowdown from annual growth of 21.0% in Q2.

London prices compare to property prices of £189,388 for the whole of the UK.

Slower regions when it comes to annual growth were the North (4.3%), Wales (5.0%) and Scotland (5.2%).

Stephen Smith, director at Legal & General mortgage club and housing, said: “A break in the sharp rises we saw a few months ago would actually be a welcome development, allowing the market to grow more sustainably.

“Property price increases need to keep in line with inflation if the market is to be healthy. If the balance is tipped towards higher house prices, which is what we have witnessed recently, many people could find themselves priced out of homeownership.

“We also need to note the regionality of the landscape. Many areas of the UK are still posting numbers below 2007’speak prices and have seen much slower growth than areas such as London and the South East.

“This regional difference is a crucial consideration for policy makers – in order for us to see a UK wide recovery, a ‘one size fits all’ approach is not going to be the answer.”

UK house prices rose by 8.5% annually to November after increasing by 0.3% in the month, while this represents a slowdown from October, when prices grew by 0.5% and 9.0% annually.

Robert Gardner, Nationwide's chief economist, said: “Housing market activity levels have remained relatively weak in recent months.

“The number of mortgages approved for house purchase in September was almost 20% below the level prevailing at the start of the year and 27% below the long-term average.

“Similarly, housing market turnover rates are well below long-term averages.

“For example, the number of mortgage transactions is currently equal to around 4% of the housing stock - well below the long-run average of 6%.”

He added: “There is something of a disconnect between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat.

“While cooling in the London market is a part of the story, this is unlikely to be main explanation for the slowdown.

“Forward looking indicators, such as new buyer enquiries point to further softness in the near-term.

“However, if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead.”