"A variety of indicators suggest that the market has lost momentum," Robert Gardner, Nationwide's Chief Economist, said in the report. "The number of mortgages approved for house purchase in September was almost 20 percent below the level prevailing at the start of the year."
"Some forward looking indicators, such as new buyer inquiries, suggest that activity may soften further in the near term, especially in London," Gardner warned.
Read more: Luxury London property sees further decline
More pessimistic data was released on Wednesday, with figures from the Bank of England showing that the number of loans approved for house purchases fell for the third month in a row, to 61,267.
The U.K. housing market has experienced rapid growth since the financial crisis struck in 2008, with low interest rates and various "Help to Buy" housing schemes from the government aiding momentum. More widely, the recovery in the U.K. economy as a whole has been partly attributed to the property market.
A stalling housing market could be seen as a bad omen for the rest of the economy, but Nationwide's Gardner remained optimistic that broader economic indicators remain positive.
Read more: Bank of England chief sounds dovish note on rates
"The labor market has continued to improve, with the unemployment rate falling to 6 percent in the three months to August and mortgage rates have fallen back towards all-time lows. Indicators of consumer confidence have also remained close to recent highs."
"If the economy and the labor market remain in good shape, activity is likely to pick up in the quarters ahead providing mortgage rates do not rise sharply. Guidance from the Bank of England suggests that the increase in interest rates is likely to be gradual…which should help ensure borrowing costs remain manageable."
The Bank of England's Monetary Policy Committee (MPC) is divided on the future path of interest rates in the U.K. At its last rate setting meeting last week, only two of the committee's nine members voted for a rate rise. Most economists expect rates to rise some time in 2015.
- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt