The annual price change now stands at 7.1%, taking the average property value in England and Wales to £176,581, down from the peak of £181,191 in November 2007.
London experienced the greatest increase in its average property value over the last 12 months with a 17.4% rise. The average price of property in the capital now stands at £461,453 in comparison with the average for England and Wales of £176,581.
The number of properties sold in England and Wales for over £1 million in September 2014 also increased by 8% to 1,172 from 1,088 in September 2013.
By region, the West Midlands saw the greatest monthly rise with a movement of 1.7%, while the East saw the most significant monthly price fall of 1.4%.
Wales saw the lowest annual price growth at 1.7%.
The most up-to-date figures available show that during September 2014 the number of completed house sales in England & Wales increased by 5% to 73,552 compared with 70,020 in September 2013.
Charlie Wells of buying agency Prime Purchase, said:
"While average house price growth is slowing, vendors who price their homes correctly and present them well can still sell quickly. Interest rates are unlikely to rise next year and the changes to stamp duty will result in confidence growing from the bottom up, with around 90 per cent of the market benefiting from reduced stamp duty. This will particularly benefit first-time buyers and stretched young families trying to move up the housing ladder.
"Those who have to pay more will think about it more and will want to know that there is a reduction in the price they are paying as a result.
"The housing market in 2014 has been polarised - good in some areas, slow and not so impressive in others. London and its surrounds have been relatively busy, while the the mainstream market below £1.5m did rather well. Opportunities for buyers have largely come when a property has been blighted by bad timing in coming to market or vast overpricing. Where a property has been priced correctly or has come to market at the right time, then it has been a seller's market.
"The general election will give people an excuse not to put their property on the market until some certainty returns. The reality is that if you have something special to sell then it will always sell, whether a general election is looming or not."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said:
"There is growing evidence of a slowdown in the housing market, with tougher criteria as a result of the mortgage market review now really having an impact.
"The changes to stamp duty should provide a modest fillip in the spring but we expect uncertainty around the general election to keep the housing market fairly subdued until after May. Once the election result is known, we expect the pent-up demand from the start of the year to be released and the year overall to be a strong one, with around £215bn of lending.
"However, there are problems with the implementation of the MMR which need resolving. The regulator must urgently address the issue of older borrowers, for example, many of whom are now struggling to get a mortgage. It is difficult to fathom why a lender would rather advance 95 per cent loan-to-value to a first-time buyer with no track record than 50 per cent to an older borrower with a 40-year unblemished track record."
