Annual house price growth has slowed to 1.1 per cent – a sharp drop on a month ago when it was 2.8 per cent. 

The Nationwide says the average house price is £258,297. This is down from £262,068 in December and well below August’s peak of £273,751.

London continues to have the highest house price to earnings ratio at 9.2. Scotland and the North region have the lowest house price to earnings ratios at 3.4.

These figures follow Bank of England data earlier this week showing mortgage approvals continuing to dip.

Helen Morrissey, analyst at business consultancy Hargreaves Lansdown, says: 

“The heady days of the pandemic race for space feel like a lifetime away and it won’t be long until we see house price growth going backwards. 

“…There are signs mortgage rates are starting to come down but it’s going to take a lot to tempt people back into the market and Bank of England data published yesterday showed mortgage approvals continuing to fall.

“Looking ahead it’s hard to see anything changing for the better any time soon. Budgets are still squeezed putting a brake on people trying to save a deposit that already takes years to build. 

“The data shows someone in London wanting to save a 20 per cent deposit could be saving for 15 years or more. Predictions of house price falls this year will also prompt would-be buyers and sellers to hold off on a purchase until the outlook looks a bit clearer.”

Tom Bill, head of UK residential research at Knight Frank, adds: “The UK housing market is headed for an annual fall in prices as mortgage rates remain notably higher than 12 months ago. To anticipate how steep, you need to look beyond the short-term distortion of the mini-Budget. 

“For example, buyers and sellers switched off early for Christmas but activity bounced back in January. The resilience of prices and sales volumes will be put to the test in the spring when larger numbers of transactions take place and by which time virtually no five-year fixed-rate mortgages below four per cent will remain in circulation. 

“We expect prices to decline 10 per cent over the next two years as budgets get recalculated.”