A rise in interest rates could damage the housing market, a senior industry figure has warned.

Bank of England governor Mark Carney gave the clearest indication yet on Friday that interest rates will rise before long, although he did not say exactly when or by how much.

Carney spoke as the Bank released data showing approvals for house purchase dipped in August to 66,580 from 68,452 in July. Lending was still above the six-month average of 66,367.

Commenting on the figures, John Phillips, sales operations director for Just Mortgages and Spicerhaart, said: “The picture is still one of a steady market which is encouraging given the changeable political landscape.

“However, if the Bank of England, as has been intimated, put rates up before Christmas I am in no doubt that the market will take a dive.”

There has already been a rush by some lenders to scrap their cheapest deals and put up prices, anticipating a rise in base rate.

While these could result in only small rises in monthly mortgage payments, the concern is whether a hike in the base rate would be a one-off or the first of a series of increases.

Meanwhile, London house prices have fallen for the first time in eight years, Nationwide has reported.

The lender’s September House Price Index showed that London prices fell 0.6% annually in the third quarter to £471,161.

This was the first time since the same period in 2009 that annual prices have fallen across the capital.

Across the rest of the UK, prices rose 2.2% on yearly basis to £210,982 in the three months to September.

The east midlands was the top performer, for the first time since 2002, with prices up 5.1% year-on-year to £177,825 in the third quarter.

The headline figures, based on monthly changes, are slightly more positive, showing growth of 0.2% between August and September to £210,116, an improvement on the previous month’s 0.1% decline.

Price growth was up 2% annually in September, slightly down on the 2.1% recorded in August.

Robert Gardner, chief economist for Nationwide, said: “House price growth rates across the UK have converged in recent quarters. Annual growth rates in the south of England have moderated towards those prevailing in the rest of the country.

“London has seen a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.6%. Consequently, London was the weakest performing region for the first time since 2005.”

Commenting on the figures, Jeremy Leaf, a north London estate agent, said: “These figures show the north-south divide in reverse and confirms what we have been seeing on the ground – that the London market is struggling for mainly affordability reasons and it is only those sellers who recognise the changed market conditions that are doing deals.

“Buyers and sellers are still nervous about prospects for the market in view of lack of perceived progress in Brexit negotiations and concerns about imminent rises in interest rates.”

The concerns about a lack of buyer confidence chime with the latest NAEA Propertymark Housing Report for August, which showed the number of house hunters registered at estate agent member branches dropped to a 12-month low of 343 on average.

However, the number of properties available to buy did increase marginally from 35 in July to 37 in August.