House prices fell by 0.6pc between November and December, marking the first monthly decline in six months, according to Halifax.
However, prices in the last three months of 2017 were 2.7pc higher than in the same three months of 2016, with the average house price now standing at £225,021. Nonetheless, the pace of growth has slowed, the lender said.
Russell Galley, managing director at Halifax Community Bank, said that house prices in the three months to December were 1.3pc higher than in the previous quarter, representing a “gradual slowdown from 2.3pc in both October and November”.
“As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat,” Mr Galley said.
Similar figures from Nationwide last week showed that house prices in the UK rose by a modest 2.6pc in 2017, a drop from the 4.5pc rise recorded in 2016. In London, average house prices dropped 0.5pc in 2017 compared to the previous year – the first fall in eight years – making the capital the worst performing region for the first time since 2004.
Halifax said it expects house price trends in 2018 to be similar to last year. “Overall, we expect annual house price growth nationally to stay low and in the range of 0-3pc by the end of 2018,” it said.
“The main driver of this forecast is the continuing effects of the squeeze on spending power as inflation has outstripped wage growth and the uncertainty regarding the prospects for the UK economy next year,” the lender said.
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said that once again we are seeing confirmation of a slowing rather than collapsing market. “There is no doubt that prices are softening, particularly in London, but Halifax also confirms what we are seeing on the high street – that a lot of hard bargaining is going on and people are generally trying to get on with their moves.”
The Royal Institution of Chartered Surveyors last month said that it expected house price growth to “grind to a halt in 2018”, amid a toxic cocktail of low levels of sales and homes on the market, as well as cautious buyers.
It said that while average growth was likely to be flat across the UK next year, more active markets in some regions will offset declines in London and the South East.