House prices fell on a monthly basis for the first time in five months during January, Halifax has claimed.
The lender’s latest House Price Index showed prices fell by 0.9% between December and January to £220,260, bucking a trend of four successive increases since August.
Annual growth also slowed from 5.7% to 9.7% and is at almost half the 10% peak recorded last March.
Martin Ellis, Halifax housing economist, said: “UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding and exceptionally low interest rates.
“These factors are unlikely to change materially during 2017. Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”
Responding to the figures, Jonathan Hopper, managing director of Garrington Property Finders, said prices continue to sleepwalk upwards because of the chronic lack of supply.
He said: “With supply still bumping along at rock bottom, prices are being supported by the lack of choice and this is keeping the quarterly and annual rates of price growth relatively steady.
“But on the front line, it is far from a seller’s market, with astute buyers able to ask for and win big discounts.
“The result is greater levels of month-to-month volatility and a sense of caution returning to the market, as rising consumer inflation threatens to drive up the cost of living faster than average wage rises.
“On this evidence the market is likely to continue its hardwired pattern of price rises in 2017, albeit at a more subdued pace as house price-to-earnings ratios begin to bite in many parts of the country.”