The UK housing market faltered slightly in December, according to HBOS unit Halifax.
In its monthly survey of house prices, Halifax said prices fell 1 per cent in December from the previous month for a 9.9 per cent annual rise, taking the average price to £186,035 sterling.
The latest figures are below expectations of rises of 1 per cent and 10.2 per cent respectively. On a quarter-on-quarter basis, house prices rose 4.2 per cent in the last three months of the year compared with the third quarter.
Commenting on the figures, Martin Ellis, Halifax chief economist, said: 'House prices fell by 1 per cent in December, but it remains too early to conclude that this indicates a genuine slowdown in the housing market. Overall, prices in the final quarter of 2006 were 4.2 per cent higher than in the previous quarter, marking the strongest quarterly rise since the second quarter of 2004.'
Continued economic growth, rising employment and an ongoing lack of supply will continue to drive up house prices over the coming months while higher interest rates, greater pressure on household finances and subdued real earnings growth will constrain demand. House prices are predicted to increase by 4 per cent in 2007, Halifax said.
In Greater London, the average price increased to £287,176 sterling by the end of the year, taking it above the inheritance tax threshold of £285,000 for the first time.