Derisory pay increases for workers in the UK have caused house price growth to slow in recent months, the Halifax said today.

Figures released by the lender revealed prices increasing 7.8% across the UK in 2014, with values inching up 0.3% in the final quarter of the year and by 0.9% in December alone.

Martin Ellis, a housing economist at Halifax, said the quarterly rate had slowed for five consecutive terms and annual growth had dropped from a 2014 peak of 10.2% in July.

He added that poor average wage growth was impacting house prices as well as the affordability of properties in some parts of the UK.

“The deterioration in housing afford ability as a result of rising house prices, earnings growth that has been consistently below consumer price inflation until very recently,” he said.

“Speculation of an interest rate rise has combined to temper housing demand since the summer. The weakening in housing demand has led to a reduction in both price growth and sales in recent months.”

He added: "We expect a further moderation in house price growth over the coming year with prices nationally predicted to increase in a range of 3 to 5% in 2015.

“Housing demand, however, should continue to be supported by a growing economy, rising employment levels, still low mortgage rates and the first gain in ‘real ’ earnings for several years."

A separate study by the Centre for Economics and Business Research (Cebr) published yesterday found that house prices grew by 8.8% last year, but added they would fall by 0.6% in the year ahead.

Nina Skero, Cebr Economist, said: “The new stamp-duty system lowers tax payments for 98% of home buyers and will give a slight boost to the market, but not enough to prevent a price drop.

“The uncertainty surrounding May’s election, proposed changes to property taxation, and reduced foreign demand are already bringing down house prices.”