Halifax has revealed, based on house price inflation in 2018, it expects the cost of purchasing the average home to increase between 2 and 4 per cent this year.
Today (January 8) the lender reported house prices in the three months to December were 1.3 per cent higher than in the same three months a year earlier – up from the 0.3 per cent annual growth rate recorded in November.
House prices in the latest quarter (October to December) were 0.4 per cent lower than in the preceding three months (July to September).
Russell Galley, managing director of Halifax, said this meant in December the average cost of a home was £229,729 and annual house price growth stood at 1.3 per cent.
Overall, Halifax reported this meant house price growth in 2018 was very much within the range of 0 to 3 per cent forecast by the mortgage lender at the start of the year.
In 2019, Mr Galley predicted continued stability in house prices with between 2 per cent and 4 per cent price inflation.
This is slightly more than what Halifax predicted in 2018, but Mr Galley noted it was still fairly subdued by modern comparison.
Mr Galley said: "However, this expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast.
"Of course, there are a number of other factors that will impact the market in 2019. The need to raise a significant deposit still acts as a restraint for those looking to buy a new home, limiting the number of potential purchasers.
"This year, mortgage payment affordability is more difficult to predict. There are competing pressures with signs of positive annual pay growth supporting affordability, but risks associated with the potential for higher interest rates are pulling in the other direction.
"On balance we do not see affordability pushing house price growth significantly in either direction.
"The shortage of homes for sale and continuing low levels of housebuilding both constrain the supply of houses, and in turn support high prices, which will continue to inhibit demand in 2019."
Kevin Roberts, director of the Legal & General Mortgage Club, said: "Despite annual house price growth still being on the rise, we’re seeing much more sustainable levels of growth.
"Couple this with lenders lowering interest rates for small deposit buyers and first-time buyers are getting much-needed support to get onto the housing ladder.
“It is not just lenders that are stepping up to help buyers though. Government schemes such as Help to Buy and Shared Ownership continue to play a positive role in our housing market too.
"With a wide range of innovative solutions and support on hand for buyers, we hope to see more and more individuals take their step into homeownership over the year ahead.”