House prices rose at their slowest pace for 11 months in the three months to December.
According to Halifax, the average house price hit £188,858 last month, representing 7.8 per cent year-on-year growth from £175,193 in December 2013 – the smallest annual gain since the 7.3 per cent annual rise reported in January last year.
On a monthly basis, prices grew 0.9 per cent from £187,197 in November.
The lender says it expects house prices to grow between 3 and 5 per cent in the next year.
Halifax housing economist Martin Ellis says: “The deterioration in housing affordability as a result of rising house prices, low wage growth and speculation of an interest rate rise, have combined to temper housing demand since the summer.
“The weakening in housing demand has led to a reduction in both price growth and sales in recent months. We expect a further moderation in house price growth over the coming year with prices nationally predicted to increase in a range of 3 to 5 per cent in 2015.”
Dragonfly Property Finance chief executive Jonathan Samuels says the UK housing market, is in a “much needed” cooling-off period, which he believes could last for some months.
He says: “The property market is taking a much needed breather and that could last most of 2015. The run-up to the general election could again dampen demand and activity, especially as housing policy looks set to be a major election issue.
“Overall, I’d expect a much calmer year for the UK market. If we want a sustainable property market, this is no bad thing.”