The monthly rate of house price growth across England and Wales has halved since April as widespread talk of a possible bubble has injected more caution into home buyers' behaviour, property analyst Hometrack has reported.
Prices rose by 0.3% month-on-month in June, edging down from a 0.5% monthly increase in May and a 0.6% uplift in April, and Hometrack said it expected the rate of growth to continue to slow.
There was no new growth in buyers registering with agents in June and at 96.6%, the typical proportion of the asking price being achieved fell for the first time in four months, indicating that estate agents were finding it harder to sustain the pace of price growth.
But with the supply of homes on the market still fairly tight, the average length of time a property is taking to sell is continuing to fall, from six-and-a-half weeks in May typically to just under six weeks in
Prices rose month-on-month by 0.5% in London, by 0.4% in the South East and Yorkshire and Humberside, by 0.3% in the North West, by 0.2% in Wales, the South West and the West Midlands, by 0.1% in East Anglia and they were unchanged in the East Midlands and the North East.
The Bank also said that lenders should also apply a new "stress test" ensuring that borrowers can keep up their mortgage repayments in the event of a rise of up to 3% in interest rates over the first five years of the loan.
Figures from the Council of Mortgage Lenders (CML) showed that nationally, 9% of new home loans were for 4.5 times income or more, while this figure was 19% in London.
The Bank's moves have been described by experts as an insurance policy to prevent another potential period of boom and bust in the future.
According to recent Office for National Statistics (ONS) figures, property values across the UK have typically jumped by almost 10% over the last year to reach a new all-time high of £260,000.
In London, where competition among buyers has been particularly intense, prices have leapt by 19% over the last 12 months.
But in recent weeks there have also been some signs of a slowdown in activity, which has been put down in part to stricter industry-wide mortgage lending rules which recently came into force and to growing caution among home buyers in the face of the strong price hikes.
Richard Donnell, director of research at Hometrack, said: "The tight supply of housing means that changes in demand can feed quickly into prices.
"As demand starts to cool so the rate of monthly house price growth has halved over the last three months.
"The proportion of the asking price being achieved has been steadily rising for the last 18 months but has now peaked as agents find it harder to sustain price rises.
"We expect the rate of house price growth to slow further in the coming months driven by a combination of factors.
"The primary factor is changing buyer sentiment in the face of an intense debate about a possible housing bubble and widespread calls for Government intervention in the market to cool price increases.
"Talk of interest rate rises in the near future has compounded the impact on sentiment and buyers expectations over the market outlook.
"The net result is that buyers are becoming more cautious."