UK house prices grew by just 2.6 percent in 2017, half the rate of 2016's growth, according to figures from the Halifax. The sluggish growth in property values was confirmed by similar research from the Nationwide, which pegged UK annual house price growth for 2017 at 2.6 percent.
In its December house price index, the Halifax said the average price of a UK home was now at £225,021, down 0.6 percent on the November price but up 2.7 percent annually. This drop was the first in house price growth since June 2017.
Meanwhile, the Nationwide pointed to an average price of £211,156, up from £209,999 a year earlier, giving an annual change of 2.6 percent.
Average house prices have slowed
Both lenders said growth in 2018 was predicted to be as slow as in 2017. The Halifax predicts growth of between 0 and 3 percent, with the Nationwide suggesting long-term growth will be 3-4 percent.
Russell Galley, managing director of Halifax Community Bank, said: "As we'd anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, while building activity, completed sales and mortgage approvals for house purchase all remained flat.
"This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.
"However, nationally, house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of housebuilding, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms."
Marked slowdown in London
In its report, the Nationwide noted the specific problem for London property, saying: "London saw a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.5 percent. London ended the year the weakest performing region for the first time since 2004."
Robert Gardner, the chief economist at the Nationwide, added: "In London and the south-east, affordability has become even more challenging, with more people priced out of the market or needing to borrow a greater multiple of their income."
According to its analysis of borrowers, the Nationwide said the average first-time buyer will need to save for eight years for an average deposit of £20,000. In London, that rises to 10 years for a deposit of around £80,000, or 20 percent of the purchase price.