House prices rose by just 0.1 per cent in the last quarter of 2004, according to the Halifax house price index.
It says this is the lowest quarterly gain since the second quarter of 2000 and is further indication of a slowdown in the market. It predicts that base rates have peaked and will fall slightly through the year.
However, Halifax believes the market’s foundations remain sound and a strong labour market, historically low interest rates and a supply shortage should curb the extent of the slowdown and it predicts a 2 per cent fall in 2005.
Last year saw an overall 15.1 per cent increase although the rise in the second half was only 2.8 per cent. This was the lowest annual rise recorded by Halifax since 2001, when prices rose by 11.7 per cent.
The average house price in the UK is now 162,086. Scotland remains the only UK region with an average price below 100,000. London is the most expensive region with an average price of 241,670.
Chief economist Martin Ellis says: “The continuing signs of a genuine slowdown in the housing market are likely to be a key factor contributing to the removal of pressures on the Bank of England to raise interest rates again. We believe that base rates have peaked at their current rate of 4.75 per cent and that rates will end the year half a percentage point lower at 4.25 per cent.”