Mortgage approvals dipped to their lowest level since June last year, amid signs that new affordability checks are having an impact on the market.
The Bank of England said that, in May, there were 61,707 home loan approvals for house purchases.
This was down from 62,806 the previous month, and lower than a recent peak of 75,901 in January.
Further evidence of a two-pace housing market has been revealed as data shows prices rocketing in London but rising below inflation in some other regions.
Property prices were up by 18.5% year-on-year in London in May, but only rose by 0.9% in the North East of England and 1.3% in the North West.
Bank of England governor Mark Carney has said that he looked at people's ability to service their debts before deciding on the new restrictions for mortgage lending.
Speaking to Robert Peston, the BBC's Economics editor, Mr Carney said that once borrowing goes above 4.5 times income it "becomes more difficult to service" and that they are trying to stop a "mass of people moving into riskier mortgages."
Plans by the Bank of England to cap riskier mortgage lending have been hailed as an important "insurance policy" for the UK economy.
Under the proposal, lenders will not be allowed to lend any more than 15% of residential mortgages at more than 4.5 times a borrower's income.
The move will have little initial short-term impact on people's chances of getting a home loan.
The right of council and social housing tenants to buy their homes at a discounted rate is to be abolished in Scotland after MSPs backed scrapping the measure.
The Conservatives made a last-ditch attempt to block the move at Holyrood.
But MSPs voted by 103 votes to 12 against the Tory amendment to the Housing (Scotland) Bill.
Britain is running out of land for food and faces a potential shortfall of two million hectares by 2030 according to new research.
The report, from the University of Cambridge, says the growing population plus the use of land for energy crops are contributing to the gap.
It criticises the government's lack of a coherent vision on how to make the most of UK farm land.
Sales of new US homes surged to a six-year high in May suggesting the housing market is beginning to recover from its recent slowdown.
Sales increased by 18.6% to a seasonally adjusted annual sales rate of 504,000 - the highest level since May 2008, according to the Commerce Department.
However, the S&P/Case-Shiller index, also released on Tuesday, found house price increases slowed in April.
Home sales hit their highest level of the year in May but a banking group says the "heat is coming out of the housing market".
Some 100,360 homes were sold in the UK during the month, up from 95,600 in April, data from HM Revenue and Customs (HMRC) shows.
Sales tend to pick up at this time of year, known as the spring bounce.
But the British Bankers' Association said mortgage approvals - an indicator of future sales - had dropped.
Abu Dhabi United Group, which owns Manchester City football club, will invest in a plan by Manchester City Council to build new homes.
The council plans to build at least 830 new homes in the Ancoats area of the city and neighbouring New Islington.
The plan will need to raise £1bn in the next 10 years and may need further investors to build the homes.
Lenders expect demand for mortgages to continue to rise in the next three months but supply may be squeezed slightly, the Bank of England has said.
The Bank's Credit Conditions Survey also found that demand for home loans "increased significantly" in the second quarter of the year.
The survey comes a few days before the Bank announces whether it will take any action to dampen the housing market.
A landlord has been ordered to pay more than £200,000 after he was prosecuted by a London council for planning breaches.
Michael Aslam of Reading had been ordered by officers at Hillingdon Council to demolish a property he owned in Sipson which had been occupied as a ‘bed in shed’.
The local authority also said the defendant had used the house and a neighbouring property as a hotel without permission.
Housebuilder Berkeley Group has reported a 40% jump in annual profits following what it called a surge in economic confidence in the last year.
It said pre-tax profits for the year to 30 April were £380m, compared with £270.7m a year earlier.
The group completed 3,742 new homes in the year, 30% more than at the peak of the housing market in 2007.
Zoopla has set its launch share price at 220p, giving a total market capitalisation of £918.8m.
The price is in the middle of the range first mooted, of 200p to 250p per share. However, the share price immediately went above the 220p mark.
Just 20% of estate agents and developers who advertise on Zoopla have taken up the discounted share price offer – with the majority passing up on the chance to make a quick 20% profit by “flipping” their shares, or to buy another tranche of shares at the same 20% discount next year.
The government's Help To Buy scheme, designed to boost the housing market, creates "medium and long-term risks to the taxpayer", MPs have warned.
The Public Accounts Committee said the portfolio of mortgage loans would create a "heavy administrative burden".
It also questioned whether it represented value for money for the taxpayer.
House price increases accelerated in April, rising by 9.9% compared with the same month a year ago, according to official figures.
The typical price of £260,000 grew at the fastest rate for nearly four years.
The Office for National Statistics (ONS) said prices rose strongly across the UK, with Wales, Scotland and Northern Ireland all picking up pace.
London, where prices were up 18.7%, remains the driving force behind the housing revival.
Crest Nicholson, the homebuilder, said profit for the first six months of the year jumped 37%.
Buyer demand is "very strong", said the builder.
The company reported profit before tax of £38.4m as revenue rose 26% to £241.1m.
Crest Nicholson returned to the stock exchange last year after a six-year absence. It builds homes mainly in the south of England.
Economic growth for the first three months of the year could be be revised up after official figures showed the construction industry grew by more than expected.
The construction sector grew by 1.5% in the first quarter, more than double the original 0.6% estimated by the Office for National Statistics (ONS).
It means first-quarter economic growth could lift from 0.8% to 0.9%.
That would be the strongest growth since 2010.
Mortgage lenders have said that a cap on the size of mortgage loans is unlikely to be "the first tool in the box" to cool the housing market.
Chancellor George Osborne plans to give the Bank of England the power to impose a cap on home loans related to income or the value of the house.
At present, the Bank can advise on such a cap, but not impose it.
But lenders believe new affordability tests are a bigger factor for those trying to buy a home.
Much has been made of the powers of the Bank of England's new Financial Policy Committee to deflate a housing bubble before it threatens disaster for the banking system and the economy.
And with signs that there is already overheating in the London housing market, which may be spreading elsewhere, these powers suddenly seem - well - quite useful.
But in practice what the FPC can do to curb dangerous lending is perhaps a bit constrained and indirect.
Action must be taken to stop the "housing boom" in parts of the UK getting "out of control", according to Business Secretary Vince Cable.
He said he was "appalled" that some banks had been lending five times a mortgage applicant's income, suggesting a "stable level" was up to 3.5 times.
The desires of potential homeowners should be balanced against the stability of the economy, he added.
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