The mortgage lender revealed monthly prices increased by 0.3% in January which is the lowest rise since June 2021.
Annually, the Halifax House Price Index revealed, prices grew by 9.7% in the UK and the average value hit a record high of £276,759.
However, the fact prices are not surging at the giddy rate of the last six months is being interpreted by experts as a sign of the market stabilising.
Russell Galley, managing director of Halifax, said: “Following the peak activity of 2021, transactions volumes are returning to more normal levels.”
Despite this he said affordability was still at ‘historically low levels’ as the house price rises of the last few months continued to outstrip earnings. This meant more barriers for young people keen to become homeowners.
The cost-of-living crisis was also expected to have an impact. Russell Galley added: “This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living and rises in interest rates begin to feed through to mortgage rates.
“While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year.”
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Wales
Wales was the strongest performing nation or region in the UK. Here house price prices grew annually by 13.9%. However, this was down slightly from December and the average house price fell slightly to £205,253.
Northern Ireland
Northern Ireland recorded strong price growth, said Halifax, with prices up 10.2% on last year. The average property value in January was £170,982.
Scotland
House price growth was also strong in Scotland. However, Halifax said the annual rate of inflation slowed somewhat to 8.9%, and the average property price went down a notch to £192,698.
England
Halifax revealed the North West was once again the strongest performing region (up 12.0% year-on-year, average house price of £213,200) and now had the second highest rate of annual growth in the UK.
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Slowdown
So, what is the outlook for the housing market going forward? Karen Noye, mortgage expert at Quilter thinks there will be some sort of slowdown in the coming year.
“With energy prices soaring, inflation running riot and interest rates likely to rise in the very near future people are going to start to feel less financially stable than they were before, and this will translate into fewer property purchases,” she said.
However, she said it was unlikely the market would crash. “While a slowdown in the medium term is likely,” Karen said, “a huge drop in property prices is probably not on the cards unless something completely unforeseen happens.
“At present the UK is still suffering from a lack of housing stock and the laws of supply and demand will keep house prices relatively high for the time being. The last couple of years have been anything but predictable and this will continue into 2022.”
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