Annual house price growth slumps further to 2.2%: Halifax

House prices remained unchanged compared to the previous quarter, down from the 1.3% quarterly rise recorded in December, and on a monthly basis prices fell for the second consecutive month in January, by 0.6% following a 0.8% decrease in December.

The average price of £223,285 at the beginning of the year is 1.9% higher than in January 2017 (£219,217), however, the current price has edged down after recording a record high of £226,408 in November.

Russell Galley, managing director of Halifax Community Bank, said: “Annual house price rises have slowed from 2.7% in December to 2.2% in January - the lowest rate since July last year. We've seen a monthly decline as well as the quarterly rate of growth flattening out.

“Although employment levels grew by 102,000 in the three months to November, household finances are still under pressure as consumer prices continue to grow faster than wages. Additionally, it’s still too early to see any impact for first-time buyers from the abolition of stamp duty on purchases of up to £300,000, which was announced in the November Budget.

“Despite the recent rise in the Bank of England Base Rate, mortgage rates are still very low. This, combined with an ongoing acute shortage of properties for sale, will continue to underpin house prices over the coming months.”

Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "In December, Halifax reported the lowest annual rise in house prices since 2012 and the first monthly fall for six months so today’s figures reflect confirmation of this trend.

"However, the Halifax numbers are a little historic. At the sharp end of the market, we’ve noticed better-than-expected viewings but won’t know whether this interest will translate into confirmed sales for the next few weeks at least. Prospective purchasers seem to be taking confidence from recent encouraging news about the economy and continuing low interest rates.

"First-time buyers too are beginning to emerge from hibernation and take advantage of lower stamp duty, the government’s Help to Buy scheme and less competition from investors. However, lingering affordability and Brexit concerns remain common to all."

Jonathan Samuels, CEO of Octane Capital, added: "High inflation and low economic visibility amid ongoing Brexit negotiations are holding the property market to ransom.
 
"While the lack of supply and low borrowing costs rule out a material deterioration in prices, the cost of living and caution around the UK’s exit from the EU are starting to get the upper hand.
 
"2018 will see the usual see-sawing in prices but, short of any major breakdowns in negotiations or shock rate rises, the year is shaping up to be flat and uneventful.
 
“A flat market, many would argue, is exactly what's needed given the entrenched affordability crisis. Over time, flat growth will offer a leg-up onto the property ladder for many first time buyers. For those already on the ladder it’s a negative, for those who aren’t, quite the opposite."