The index, released on Thursday, showed that the annual rate of house price inflation had dropped from its peak of 22.1 per cent last July to 13.7 per cent in January.
This was the lowest annual rate since December 2001 when annual prices rose by 11.7 per cent. Crucially the last six months had seen an increase of only 1.4 per cent.
Commenting Martin Ellis, chief economist at the Halifax, said: “The reduction in house price growth and activity since mid-2004 has been a result of the increasing affordability difficulties facing first-time buyers and the rise in interest rates since late 2003, which have curbed housing demand.”
However Ellis remained upbeat about the long-term prospects of the housing market. “The ongoing strength of the UK economy and the labour market remain solid foundations for the housing market, ensuring that it remains in good health.
“The second successive monthly rise in house prices in January suggests that the market is undergoing a measured slowdown,” he said.
The number of loans approved for house purchases has fallen by one-third since May 2004 when activity began to fall, according to the Bank of England. There was, however, a modest rise in December to 83,000 from 77,000 in November (seasonally adjusted).
Sales recorded by estate agents were unchanged in December, marking the first time in nine months that sales did not fall, according to the latest RICS survey.
