House price growth slowed to 4.3% in 2015, roughly half the levels seen in 2014 and 2013, according to the Nationwide House Price Index.
The growth meant house prices were now 7% above their 2007 peak, with the price of the average home £197,000.
According to Nationwide chief economist Robert Gardener, the 2015 increase was broadly in line with earnings growth, though prices could rise by between 3% and 6% next year.
“As we look ahead to 2016, the risks are skewed towards a modest acceleration in house price growth at the national level, despite the likelihood of interest rate increases from the middle of next year,” he said.
While London saw the highest growth for the fifth consecutive year, this is seen as increasingly unlikely to continue, with affordability stretched to the limit in the capital, particularly for first-time buyers.
House prices in London are now 50.8% above their previous 2007 peak, while mortgage payments for first-time buyers as a percentage of take-home pay have risen to 66.3% – just shy of their 69.6% high.
Comparatively, the national average is 34.4%, and slips to around 22% in the North of England and Scotland, while prices in six of the regions measured still remain well below 2007 levels.
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