The Halifax is suggesting that while capital values are still high – in fact running at a record – growth is diminishing and will be hit later this year by the cost of living crisis.

House price growth has already slowed significantly to just  0.3 per cent in January – the lowest rise since last summer – while the annual rate of growth remains steady at 9.7 per cent.

This means the average home has appreciated some £24,500 over the last year, and £37,500 over the past two years. 

Wales was easily the strongest performing nation, with annual house price inflation of 13.9 per cent while in England the North West was again the strongest performing region, up 12 per cent annually. 

London remains the weakest performing area but annual house price inflation has risen for three months on the trot.

“Following the peak activity of 2021, transaction volumes are returning to more normal levels. Affordability remains at historically low levels as house price rises continue to outstrip earnings growth. Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging” explains Russell Galley, managing director at Halifax.

“This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living, and rises in interest rates begin to feed through to mortgage rates. While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year” he adds.

PropTech entrepreneur and market analyst Anthony Codling says: “Deposits will be key to the level of house price inflation this year. Those with a big deposit will be able to rise above the living and mortgage cost rises, those without will not and unfortunately, the deposit poor will also find it harder to save as living costs rise.”