House prices in England and Wales continued to rise during December despite fears of a moderating market, according to the latest Financial Times house price index.
According to the research the average price of a home increased by 0.1 per cent during the month this, however, was the slowest growth recorded since July 2005.
Annual growth slumped from the 8.9 per cent recorded in November to 7.9 per cent which is the slowest rate of growth since October 2006.
"As our national index summary indicates, the market has been slowing on a monthly and annual basis since August reinforcing the view that this has been a year of two halves," said Peter Williams, chairman of Acadametrics, which carried out the research.
In the second half of the year prices appear to be slowing with price growth expected to be flat or falling during 2008.
"Although the annual increase at nearly eight per cent is still substantial by any standards, it is the monthly rate that has now become significant in terms of overall market direction," continued Mr Williams.
"The FT index is trending downwards and this is very much in line with other market reporting."
Despite the gloomy picture elsewhere, London continues to display encouraging signs of growth, with prices growing by 17.4 per cent in the 12 months to the end of December.
Outside of the capital prices also performed well in the south-east and south-west, where average gains of 9.2 and 8.4 per cent were recorded respectively.
Overall, however, the expectation is of a slowing market.
"With continued weakening in consumer confidence and the extensive negative commentary on market prospects in 2008, we would expect this downward trend to continue even though the fundamentals of demand and supply, employment and interest rates remain favourable," concluded Mr Williams.