House price growth is predicted to be between just 3-5% next year, according to Halifax, however demand will remain high due, in part, to low interest rates.

The mortgage lender did, however, say that it was not expecting prices to fall as employment levels improved and any increases to interest rates were likely to be gradual.

Martin Ellis, Halifax housing economist, said that house price inflation is expected to have peaked at around 10% in July 2014.

Strutt & Parker & its retained economic advisors Volterra has predicted 5.0% growth for house prices in 2015. Whilst improved economic foundations would certainly suggest that prices will continue to rise over the next few years, the biggest perceived uncertainty surrounding the property markets over the remainder of 2014 and 2015 will continue to be the looming election.

Stephanie McMahon, Head of Research at Strutt & Parker, explains: “Agents are reporting a continued slowdown in some areas as buyers and sellers nervously await news on the upcoming General Election and the potential for Mansion Tax.

"This is beginning to feed through into transaction levels. As is often the case in uncertain times, it may also be that transaction levels will decrease in the run up to May 2015, but values could hold up better than expected.

"We expect that price growth during the remainder of 2014, and even more so in 2015, will be sensitive to prevailing political press and expectations.”

Rates and affordability

A further moderation in house price growth is likely in 2015 as supply and demand become increasingly better balanced.

The prospect of higher interest rates at some point towards the end of the year and the reduced affordability are expected to be key factors curbing housing demand.

The Bank of England’s Inflation Report showed that members of the MPC see inflation remaining below its target for the next couple of years.

These lower inflation forecasts have eased expectations from the market that interest rates would rise early in 2015.

Martin Ellis said that General Election in May could also add to a lull in activity in the early months of next year.

However, despite the downward pressures on the market Halifax expects housing demand to continue to be supported by the ongoing economic recovery, growth in employment levels and low interest rates.

The South

The strong house price growth seen during the past year has been led by London and, to a lesser extent, southern England.

But with mortgage affordability in the capital now worse than its long run average, there has been a noticeable cooling in the London property market in recent months.

Ellis expects a more even regional pattern in house price growth during 2015.

Mortgages down

The forecast came as figures from the British Bankers’ Association showed the number of mortgages approved for house purchase fell for the fourth consecutive month in October.

The major banks approved a total of 37,076 loans for people buying a home during the month. The figure was down from 39,127 in September and was 16 per cent lower than in October 2013.

The group attributed the recent fall in pipeline loans to softness in the housing market.