House price growth slowed to 5.7% in January from 6.5% in December, Halifax’s house price index has revealed.
Prices fell by 0.9% in a month, bringing the quarterly rate of growth to 2.4%, down from 2.5% in December.
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.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, was cautious about the state of the market.
He said: “Worries about rising inflation and what this means for general living costs and interest rates, as well as stricter mortgage criteria and the focus on affordability, are having an impact on people’s decision-making.”
But Russell Quirk, founder and chief executive of eMoov, primarily attributed the drop in growth to a seasonal slowdown rather than anything long-term.
He said: “There are those that will, of course, see this marginal monthly drop in house prices as a fulfilment of the Armageddon style prophecies that have plagued the UK market since the start of last year, with many widely predicting a troublesome year ahead for property.
“But these figures demonstrate the robust, Teflon style nature of the UK market, as, despite a turbulent year for property, it has weathered the storm and continues to see upward price growth both annually and when compared to the last quarter.
“January is always a lethargic month for UK property as a result of the Christmas break and so any fall in house prices at this time of year should be taken with a pinch of salt, rather than a handful of panic.”
Other commentators were bullish about the year ahead, especially with the low mortgage rates available.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, said: “Despite a slight dip in January, the trajectory for house prices over the long-term looks more likely to be upwards.
“Seasoned investors will know that it’s essential to take a long term view on the property market, and monthly or even quarterly fluctuations should not blur the bigger picture.
“Property prices have been remarkably stable even with multiple tax changes and the spectre of Brexit. The harsh reality for those trying to buy is that there’s a critical shortage in supply, which is underpinning the market.
“Ultra-low interest rates is also helping to stimulate demand from first-time buyers or those hoping to move up the ladder.”
Tarlochan Garcha, chief executive at peer-to-peer property lending platform, Kuflink, said: “The days of double-digit price rises are gone, and while the market fundamentals are robust enough to drive growth this year, progress will be sedate.
“But while mortgage rates remain low, and the labour market strong, buyers aren’t going to disappear into the ether.
“Serious buyers are price sensitive, yet committed. Prices are being supported by the reckless imbalance between demand and supply, but deals are being done on decently priced quality homes.
“The next few months will be crucial to set the tone for the year, as we enter peak buying season. For now, there’s every reason to feel cautiously optimistic about 2017.”