House prices grew by just 5.1 per cent year-on-year in the three months to February, the lowest annual rate since July 2013.
The figures from Halifax show that quarter-on-quarter house prices edged up 1.7 per cent, with the UK average house price now standing at £219,949.
Martin Ellis, Halifax housing economist, said that house price growth had nearly halved over the past 11 months - down from a peak of 10 per cent year-on-year growth in March 2016.
Ellis said: "A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home.
"This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017."
House prices have been falling in central London due to tax changes brought in by former chancellor George Osborne. He increased the stamp duty rates on homes worth more than £1m, driving price corrections in areas such as Chelsea, Kensington and Fulham.
Data from Hometrack has shown that in January house prices fell in the following three local authority areas in London:
|London local authority||House price change y-o-y||Average house price|
|Kensington and Chelsea||-3.3 per cent||£1,281,400|
|Hammersmith and Fulham||-1.3 per cent||£765,600|
|City of Westminster||-0.3 per cent||£986,400|
Some analysts have predicted that house prices in these areas could continue to fall this year, possibly by as much as 10 per cent, while others have argued that the necessary price adjustments have already been made.