House prices fall as market cools in 'correction'

House prices fell in value by 0.9pc last month as the market market started to cool, according to Halifax.

This monthly fall in prices follows four consecutive months of growth, with December's monthly rate of growth at 1.6pc.

The rate of growth in the 12 months to January was 5.7pc, down from 6.5pc the annual growth rate recorded the previous month. 

Howard Archer, of IHS Global Insight, described the fall as a "correction", and said that house prices will rise by no more than 3pc this year.

He added: "Weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on house prices. However, a shortage of supply is likely to put a hard floor under prices."

Halifax's house price index is more volatile than Nationwide's, which last week reported house prices rose by 0.2pc on a monthly basis in January. But both indices signal that house prices have slowed in the start of this year.

Martin Ellis, Halifax housing economist, said that the annual rate of growth remained "robust" due to an "ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates". He added: "These factors are unlikely to change materially during 2017."