ONS: House prices up 8pc

On a seasonally adjusted basis house prices fell by 0.5% between February and March.

House price inflation was 8.5% in England, 4.9% in Wales, 0.8% in Scotland and 0.3% in Northern Ireland.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “There are signs that the upwards momentum in the housing market is cooling slightly.

“As for the mortgage market, with the new affordability rules keeping lenders under a tight rein, decisions to offer credit are being taken with clear heads and a full and honest appraisal of borrowers’ finances.”

Nicholas Ayre, managing director of buying agency Home Fusion, said: “Sentiment is changing.

“Estate agents are telling me that buyers are increasingly unwilling to pay the mad prices that vendors are asking.

“Vendors will need to be realistic about pricing if they want to secure a sale. This may take a couple of months or so but it will happen as savvy buyers are saying 'enough is enough'.”

ONS figures reinforced the regional disparity in the UK, as in London house prices have risen by 17%, yet excluding London and the South East prices increased by just 4.7%.

Stephen Smith, director Mortgage Club and Housing at Legal and General, said: “This highlights the importance of recognising that each area of the UK needs to be supported and stimulated in different ways.

“The government cannot make decisions for the whole of the country based simply on London’s figures.”

Governor of the Bank of England Mark Carney and deputy prime minister Nick Clegg recently indicated that Help to Buy could be pared back if the housing market was deemed to be overheating.

But Richard Sexton, director of e.surv chartered surveyors, said: “Help to Buy is keeping the mortgage market accessible despite these barriers and the number of first-time buyers actually hit a pre-recession high in March.

“But unless the stock of available homes is rapidly increased, there is a limit to how effective the scheme can be.”

In March 2014 prices paid by first-time buyers were 10% higher on average than March 2013.

Brian Murphy added: “Public comments from the Governor of the Bank of England and the prime minister in the last 48 hours have made two vital points.

“Firstly, that we need more homes to keep up with the demands of our growing population; and secondly, that Help to Buy is making a difference to aspiring homeowners across the country with very little role behind the flurry of activity in London and the South East.”

Stephen Smith added: “Another key issue that continues to plague the market is the fact that demand for properties far outstrips supply. Not only will this have a dramatic impact on house prices, but it will also be a significant driver of social inequality in the UK.

“The government must do much more to support the supply side. It is vital that first-time buyers continue to be supported, and that we do not allow them to be priced out of the market. In order to safeguard the supply situation, we simply need to build more homes.”