The bank reckoned the increased difficulty on getting on the housing ladder coupled with the prospect of a rate rise will put the brakes on house price growth next year.
Halifax put annual price growth at 9.7% in October 2015, the highest annual rate since August 2014.
The bank predicted price growth in London to slow more sharply than elsewhere in 2016.
Martin Ellis, Halifax’s housing economist, said: “With house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder.
“This ongoing development, combined with the growing prospect of an interest rate rise, should start to put the brakes on house price growth during the course of 2016. Annual house price growth nationally is expected to slow to 4-6% by the end of 2016.
“A continuing shortage of supply is likely to continue to act as a significant constraint on activity over the coming year. Sales in 2016 are expected to be modestly higher than this year, but to remain well below the peak of 1.6 million in 2006.”
Ellis predicted a healthier balance between housing supply and demand in the medium with improved housebuilding.
He added: “A greater focus on house price stability by policymakers should also help to prevent a future build-up of mortgage debt threatening financial stability and assist in curbing house price growth over the medium and longer-terms.”
