House prices see lowest growth rate since July 2013

House price growth has dropped to a three-and-half-year low despite a surprise jump last month.

Property values in October were up 5.2% annually, marking the lowest growth rate since July 2013 and a significant cool down from a 10% rise in March.

On a monthly basis, house prices surged by a better-than-expected 1.4% in October, according to the Halifax House Price Index.

The average house price was £217,411.

Martin Ellis, Halifax housing economist, said: "Activity levels, like house price growth, have softened compared with a year ago.

"Home sales, however, appear to have stabilised in recent months following the distortions earlier in the year due to the changes to stamp duty in April."

"Annual house price growth has nearly halved from a peak of 10% in March this year, but remains robust at 5.2%.

"This expected slowdown appears to have been largely due to mounting affordability pressures, which have increasingly constrained housing demand.

"Whilst house price growth may ease further in the coming months, very low mortgage rates and a shortage of properties available for sale should help support price levels."

Despite the month-on-month jump, Halifax said its quarterly figures are a better indicator of what is happening in the marketplace.

The report said house prices rose 0.1% in the three months to October compared with the previous three months.

Howard Archer, chief UK and European economist at IHS Global Insight, said October's 1.4% month-on-month jump may have been a market correction after September eked out growth of 0.3%.

"With housing market activity seemingly coming modestly off its recent lows and the economy currently resilient, house prices may well rise modestly in the near term," he added.

"However, we suspect that house prices will come under increasing pressure as 2017 progresses and may dip modestly over the year, possibly by around 3%."

He said housing market activity would be impacted next year by the "deteriorating fundamentals for households" and heightened uncertainty surrounding Britain's exit from the European Union.