House price increases are expected to stall in 2017 according to the Halifax House Price Index.
The report predicts 2017 will see between a 1% and 4% increase in house prices, in agreement with the latest RICS survey, which predicts an average increase of 3%.
Halifax confirmed that sales have largely stabilised in recent months, increasing 1% between September and October, following the distortions earlier in the year due to the increase in stamp duty on second homes and buy to let purchases in April.
However, sales between August and October were 8% lower than in the same period last year.
Confidence in the UK housing market has fallen to its lowest point in three years but a majority still expect prices to rise.
A lack of stock continues throughout the UK reaching record low levels, however the completions and starts of new homes in England in 2016 quarter three were respectively 7% and 9% higher than in 2015.
Halifax’s Housing Economist Martin Ellis said: “The housing market is critically dependent on how the wider economy evolves. We consider it most likely that the UK economy will soften over the course of 2017.
“This is most likely to result from the weakening of sterling pushing up import costs and dragging on purchasing power, both for consumers and as a determinant of business investment spending.
“Slower economic growth in 2017 is likely to result in pressure on employment with a risk of a rise in unemployment. This deterioration in the labour market, together with an expected squeeze on households’ spending power – as inflation picks up and outpaces earnings growth later in the year – is likely to curb housing demand.”