Prices in the three months to January were 2.2% higher than in the same three months a year earlier, although the annual change in January was lower than in December (2.7%).
The Halifax House Price Index found that prices fell for the second consecutive month in January, decreasing by 0.6% following a 0.8% decrease in December.
Russell Galley, managing director, Halifax community bank, said: “Annual house price rises have slowed from 2.7% in December to 2.2% in January – the lowest rate since July last year.
“We’ve seen a monthly decline as well as the quarterly rate of growth flattening out. Although employment levels grew by 102,000 in the three months to November, household finances are still under pressure as consumer prices continue to grow faster than wages.”
“This, combined with an ongoing acute shortage of properties for sale, will continue to underpin house prices over the coming months.”
The average price of £223,285 at the beginning of the year is 1.9% higher than in January 2017 (£219,217), however, the current price has edged down after recording £226,408 in November, which was the highest on record.
The number of first-time buyers is estimated to have reached 359,000 in 2017, rising by 6% in the last 12 months, continuing an upward trend of six years.
Galley added: “Additionally, it’s still too early to see any impact for first-time buyers from the abolition of stamp duty on purchases of up to £300,000, which was announced in the November Budget. Despite the recent rise in the Bank of England Base Rate, mortgage rates are still very low.”
Jeff Knight, director of marketing at Foundation Home Loans, said: “Wage growth remains stagnant and, while consumer confidence levels started the year relatively buoyant, the stamp duty cut for first-time buyers won’t yet have had a significant impact on prices – though we’ll be keeping a close eye on regional patterns that do start to emerge.”
“Continued attractive mortgage rates boosting demand will always inflate prices to an extent, and the ongoing issue of poor housing supply still means lack of choice for potential buyers.”
Total UK home sales in 2017 were marginally lower (-0.6%) than in 2016 at 1.23million and mortgage approvals for house purchases ended the year with a sharp fall.
The number of mortgage approvals – a leading indicator of completed house sales – fell by 5.7% month-on-month in December to 61,039, the lowest level since January 2015.
Lucy Pendleton, founder director of independent estate agents James Pendleton, said: “If the housing market’s New Year resolution was to continue to defy expectations, it’s still just about managing to do that.
“News of a second monthly decline coming on the back of the kind of stock market turbulence we haven’t seen since the Brexit vote means it’s harder but not impossible to be optimistic. The market has still grown year-on-year and the declines are modest.”
New instructions for sale continued to deteriorate at the headline level and have now fallen for 23 consecutive months – the worst sequence for almost eight years.
Russell Quirk, founder and chief executive of Emoov.co.uk, said: “With wage growth failing to keep pace with consumer prices, the immediate aftermath of the festive season is a tough time of year for all as demonstrated by this rather fitting market freeze.
“January is always a struggle and even with the current low cost of mortgage rates, market activity will remain predictably muted as buyers look to find their stride financially.
“Price growth will soon thaw and as the market gains momentum into spring and summer the pick-up in buyer interest and market activity will see prices once again on the up.”
Daniel Hegarty, chief executive and founder of digital mortgage broker Habito, added: “December’s marked drop in mortgage approvals indicates that most people took the opportunity to remortgage before the Bank of England’s interest rate rise in November.”