Ongoing pressure on household incomes is leading to a much slower housing market, according to Halifax.
The lender’s new stats show that house price growth dipped to 1.9% in January, from 2.1% in December, marking the lowest rate since October 2019.
And the trend is set to continue this year as higher interest rates lead to reduce demand for people to buy houses.
Those in South West England saw annual house price growth slow right down to 2.7% compared to 6.0% in December.
In London, house prices fell from £541,000 to £530,000 in January, with annual house price inflation at 0% compared to 2.9 per cent in December.
The average house price is now £281,684.
The housing market has slowed across all nations and regions and is expected to slow further this year, and many forecasters expecting price falls of up to 20%. Halifax predicts a drop of 8% this year.
Director of Halifax Mortgages, Kim Kinnaird, said: “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years.
“As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.
She said that lower prices could make it more affordable for people to get on the housing ladder as the year went on.
“For those looking to get on or up the housing ladder, confidence may improve beyond the near term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”