House price growth 'flattening out' as values dip by 0.6% in January
Property prices are "flattening out" as household budgets continue to come under pressure, according to an index.
Across the UK, values dipped by 0.6% month on month in January - the second month in a row of declines after a 0.8% decrease in December, Halifax said.
House prices were still higher in January when compared with a year earlier, although the annual rate of growth slowed to 2.2%.
The average house price in January was £223,285. Property prices showed no growth on a quarterly basis, with a 0% increase when comparing the period between November and January with the previous three months.
Russell Galley, managing director, Halifax Community Bank, said: "Annual house price rises have slowed from 2.7% in December to 2.2% in January - the lowest rate since July last year.
"We've seen a monthly decline as well as the quarterly rate of growth flattening out.
"Although employment levels grew by 102,000 in the three months to November, household finances are still under pressure as consumer prices continue to grow faster than wages."
But he said continued low mortgage rates, combined with "an ongoing acute shortage of properties for sale", will continue to prop prices up.
Howard Archer, chief economic adviser at EY Item Club, said: "The latest Halifax data reinforces our belief that 2018 will be a difficult year for the housing market and price gains over the year will be limited to a modest 2%."
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: "At the sharp end of the market, we've noticed better-than-expected viewings but won't know whether this interest will translate into confirmed sales for the next few weeks at least."
He added: "Sellers still have to be realistic and particularly recognise the importance of setting sensible asking prices if they are to generate offers."
Sarah Beeny, founder of estate agent Tepilo.com, said she believes slower house price growth will be a continuing trend across 2018 as households are squeezed by inflation.
She added: "However, despite this squeeze on people's finances, there's still a chronic shortage of properties coming on to the market."
She said this should ensure that house prices continue to head upwards "albeit at a much slower pace than we've seen over the past few years".