House prices in the West Midlands are continuing to level off despite further signs of a pick up in the national market.
Latest quarterly figures from the Halifax covering the third quarter of the year showed that average property values in the region rose by just 0.3 per cent between August and September and by 1.1 per cent over the past year.
The figures contrast with a national rise of 1.2 per cent in September, yesterday's house price survey showed.
Halifax chief economist Martin Ellis said the UK as a whole had seen average price growth of three per cent in the third quarter.
"Healthy household income growth and historically high levels of employment are supporting the housing market and the Bank of England's decision to cut interest rates in August also appears to have given the market a boost," Mr Ellis said.
"Nonetheless, the reduction in economic growth this year and the continuing high level of house prices in relation to average earnings are expected to constrain housing demand and prevent a sustained surge in house prices.
September's price spurt resulted in an increase of 1.8 per cent for the past three months - the biggest quarterly rise for a year, the mortgage bank added.
The Halifax said the lift in monthly house price inflation was consistent with a recent rise in activity levels, although the three per cent annual rate of growth was still well down on the 20.5 per cent recorded in the same quarter of 2004.
The biggest house price rises in the third quarter of 2005 were in the North at 6.6 per cent, followed by Northern Ireland at 4.5 per cent and the North West, where the gain was 3.9 per cent.
Prices in Greater London rose by 3.8 per cent following four successive quarterly falls in the capital.
There were house price falls in the third quarter in the South West and the East Midlands with declines of 1.4 per cent in both regions.
Standard Chartered economist Gavin Redknap said the Bank would be pleased that the slowdown seen over the past year had not turned into a crash.
He added: "The data will give plenty of food for thought for those advocating further rate cuts.
"While it would do much to help the now-weak consumer sector, the last thing the Bank would want to do is set in train another chapter of the housing boom."
The Halifax also said the annual rate of house price inflation was now in single digits in all regions of Britain.
The biggest gains over the past year have been in the North West at 9.1 per cent and Yorkshire and the Humber with eight per cent.
Four regions have experienced small falls during the last 12 months - East Midlands (0.4 per cent), East Anglia (0.8), South-east (1.1 per cent) and the South West (1.1 per cent).
Global Insight economist Howard Archer said: "We remain sceptical that house prices are set to see sustained sharp rises any time soon.
"Most affordability ratios are still stretched and will only improve gradually over the coming months." n Precision engineer Renold has sold the nine-acre site of a former factory at Burton on Trent to Morris Homes (East Midlands) for a potential £8.65 million cash.