New figures from Nationwide show house price growth slowing in January as expected. It found residential property prices rising by 0.7% this month, which is less than half the increase a month earlier.

Also, year on year property prices slowed to just 14.3% from 15.6% in December, the lowest level since March 2002.

Nationwide said it expected price growth to ease over the first half of the year, but that it is too early to judge whether this is a long-term trend.

109,000 properties changed hands in December, which is 11% less than the year before – confirming that 2003 had the lowest number of property sales since 1998. However demand, says Nationwide, remains strong.

Alex Bannister, Nationwide’s Group Economist added: ‘There are still commentators who think the market is set for a fall. In real terms, property prices are at their highest ever level, but this is not necessarily an indicator that the market is overheated and ready to decline.’

According to Mr Bannister, people buying houses are of above average income, and unlike in the 1980s, are not overstretching themselves financially to get onto the property ladder.

Nationwide’s findings concur with the Bank of England’s expectations that house price inflation is set to ease off over the next two years.