Property price inflation has fallen from its peak of 10.2% in July 2014, while Halifax predicts growth between 3 and 5% throughout 2015.
Average house prices now stand at £188.858, which still represents growth of 0.9% monthly and 0.3% on a quarterly basis.
Martin Ellis, housing economist at the Halifax, said: "The deterioration in housing affordability as a result of rising house prices, earnings growth that has been consistently below consumer price inflation until very recently and speculation of an interest rate rise, have combined to temper housing demand since the summer.
“The weakening in housing demand has led to a reduction in both price growth and sales in recent months.
"We expect a further moderation in house price growth over the coming year with prices nationally predicted to increase in a range of 3 to 5% in 2015.
“Housing demand, however, should continue to be supported by a growing economy, rising employment levels, still low mortgage rates and the first gain in ‘real’ earnings for several years.”
Home sale figures dropped below 100,000 in November 2014 for the first time since November 2013 to stand at 98,490 according to seasonally adjusted HMRC figures.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “We are still witnessing a two speed market, with house prices in London and the South East increasing faster than the rest of the UK.”
“In order to ensure that this growth is sustainable and to avoid pricing people out of the housing market, we must build more houses across the country as demand still outstrips supply.
“With the general election approaching, it is good to see this issue moving towards the top of the political agenda; promoting a healthier and sustainable market where house prices grow at a similar rate to inflation.
“If this trend continues, 2015 will hopefully see less of the dramatic price rises that have been characteristic of the last year.”
The ratio between housing supply and demand eased for a fourth consecutive month in November according to data from the Royal Institution of Chartered Surveyors’ (RICS).
Jonathan Samuels, chief executive of Dragonfly Property Finance, added: “The property market is taking a much needed breather and it's a breather that could last most of 2015.
"The run-up to the general election could again dampen demand and activity, especially as housing policy looks set to be a major election issue.
"Overall, I'd expect a much calmer year for the UK market. If we want a sustainable property market, this is no bad thing."
