The slowdown in house price growth continued in December with a rise of just 0.3 per cent recorded by the Halifax House Price Index, the lowest quarterly growth rate since November 2012.

Comparing three month growth rates on a monthly basis, December marked the fifth successive month to record a fall, down from 3.5 per cent growth in the three months to July.

Annually, house prices grew by 7.8 per cent in December compared to its peak in July which saw a 10.2 per cent rise in the value of homes, the final month of 2014 reflected the financial struggles borrowers are facing.

Halifax’s housing economist, Martin Ellis, said: “The deterioration in housing affordability as a result of rising house prices, earnings growth that has been consistently below consumer price inflation until very recently 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.”
Ellis said the bank expected further moderation in house price growth over the coming year with national house prices predicted to increase in a range of 3 to 5 per cent.

“Housing demand, however, should continue to be supported by a growing economy, rising employment levels, still low mortgage rates and the first gain in ‘real’ earnings for several years,” said Ellis.