House prices rose a robust one percent last month, Halifax data shows, suggesting the property market has remained resilient in the wake of August's interest rate rise.
However, the annual rate of house price inflation eased for a third month to 8.0 percent in the three months to September on a year ago, its lowest rate since April and compared with 8.2 percent in August.
HBOS Plc, the country's largest mortgage lender, said there were signs the market had reached a plateau.
We expect increased utility bills and higher interest rates to curb housing demand over the coming months, causing annual house price inflation to ease between now and the end of the year, said Martin Ellis, Halifax chief economist.
Halifax revised up its August monthly reading to 1.3 percent from 1.0 percent. That was the same month the Bank of England wrongfooted financial markets by raising rates to 4.75 percent.
With inflation still above target, most analysts expect another rate rise before the end of the year, though most expect the Bank of England to leave rates on hold this week.
The Halifax data provide further evidence that house prices have regained significant upward momentum recently, said Howard Archer at Global Insight.
Indeed, an interest rate hike cannot be completely ruled out this Thursday, although we think it is more likely that the Bank will act in November.
Sterling showed little reaction to the numbers, which followed robust house price data from the Nationwide Building Society last week, while UK interest rates futures ticked slightly lower.
This survey resonates well with Nationwide's September report with both indicating the housing market has shrugged off the August rate rise, said Richard McGuire, strategist at RBC Capital Markets.
He noted the fall in the annual rate was merely due to unfavourable base effects as house prices rebounded after an interest rate cut in August 2005.