House prices see 2.9% monthly slump: Halifax

Prices also fell on an annual basis, seeing growth of just 0.8% compared to the 1.3% rise recorded in December.

House prices in the three months to January were 0.6% lower than in the preceding three months.

Russell Galley, managing director at Halifax, said: “Attention will no doubt be drawn towards the monthly fall of -2.9% from December to January, the second time in three years that we have seen a drop as a new year starts. However, the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8%.

“This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.

“There’s no doubt that the next year will be important for the housing market with much of the immediate focus on what impact Brexit may have. However, more fundamentally it is key underlying factors of supply and demand that will ultimately shape the market.

“On the supply side the most constraining factor to the health of the market is the shortage of stock for sale, although this does support price levels. On the demand side we see very high employment levels, improving real wage growth, low inflation and low mortgage rates. All positive drivers tempered by the challenges of raising deposits. On balance therefore we expect price growth to remain subdued in the near term.”

Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "At first glance, these figures look disappointing but they feel historic, particularly at the turn of the year. What we are seeing on the ground is the release of some pent-up demand prompting more listings, viewings and offers over the past few weeks than we dared hope for. However, interest is very patchy and real value must be perceived, otherwise little market change will result.

"Looking forward, we do not expect any significant improvement at least until the odds on a Brexit deal improve."

Sam Mitchell, CEO of Housesimple, added: "It's difficult to read too much into monthly house prices figures that are rollercoastering so dramatically from month-to-month.

"We need to put these extreme monthly changes into the context of the economic climate we find ourselves in at the moment. Brexit is a monumental event and actually when you look at how the housing market is standing up in the face of some pretty strong headwinds, it's proving to be surprisingly resilient.

"But the lack of any definitive Brexit deal on the table, and the odds being slashed on a No Deal, is playing on everyone's minds. This is inevitably having an impact on transaction levels, and will likely continue to do so until there is clarity.

"That's not to say that activity is subdued across the country. We are actually seeing healthy transaction levels in many northern areas such as Yorkshire, where there seems to be an almost stubborn refusal to let Brexit govern their lives.

"What's clear on the ground is that there's plenty of pent up buyer demand, but buyers are watching Brexit developments like hawks and taking their time to commit."