House price growth is starting to soften in London and across the country, property analyst Hometrack has reported.
The typical proportion of the asking price buyers paid across England and Wales in May remained at the highest level seen in 12 years, at 96.8%.
But Hometrack, which surveys estate agents and surveyors every month, said that "widespread talk of a possible housing bubble" is starting to test buyers' resolve and it expects to see further signs of price increases slowing in the coming months.
Across the country, prices typically increased by 0.5% month-on-month, edging down from an increase of 0.6% recorded in both March and April.
The percentage of postcodes seeing prices increase over the month also slipped back, from 50% in April to 42% in May.
Properties are also sitting on the market for a day or two longer than they were in April, at six and-a-half weeks on average, compared with around six and-a-quarter the previous month.
Crucially, price growth is also moderating in London, which has been seen as the engine of the housing market revival with the strong pull it has for overseas buyers.
property values tend to be at their most expensive, has "slowed significantly".
Despite signs that price growth is slowing, no region saw values drop month-on-month and Hometrack said that a lack of supply of homes to choose from is still helping prices to continue on their upward trend.
Prices were unchanged in the North East, increased by 0.1% in Wales and the North West, edged up by 0.3% in East Anglia, rose by 0.4% in the South West, lifted by 0.5% in the West Midlands and Yorkshire and Humberside and, like London, rose by 0.6% in the East Midlands. The South East saw stronger month-on-month growth than London, at 0.7%.
A mortgage lending clampdown came into force at the end of last month to prevent people from taking on unaffordable debt. Under the Mortgage Market Review (MMR) rules, home buyers and people looking to re-mortgage face more in-depth questions about their financial lives and "stress tests" are also applied to make sure they could still afford their payments when interest rates eventually start to rise.
Speculation has also been mounting in recent weeks that the Bank of England could step in and impose measures to calm the market down, possibly by restricting the Help to Buy mortgage support scheme, amid fears over the impact that a potential housing bubble could have on the recovering economy.
There are also signs that banks are deciding to put a tighter lid on high-value mortgage lending themselves. Britain's biggest mortgage lender, Lloyds Banking Group, recently announced a new cap which means that people applying to take out a mortgage worth more than £500,000 will see the amount they are allowed to borrow limited to four times their income.
Richard Donnell, director of research at Hometrack, said: "There are already signs of slower activity in the mortgage market and we expect to see further signs of slowing house price momentum in the months ahead."
He added: "Strong price increases, widespread talk of a possible housing bubble and recent warnings from the Bank of England on house price inflation are starting to test the resolve of buyers.
"London has led the recovery, but the impetus for growth is emanating out of the lower value parts of the London market. In central London, house price growth has slowed significantly in the last year and was just 0.2% in May."