The string of consecutive interest rate hikes from the Bank of England is continuing to bite on the housing market, with average annual UK house price gains dipping to the slowest pace in three years, the Halifax said Tuesday.

House prices rose 1.9% year-on-year, slowing from 2.1% in December, the UK's leading provider of mortgages said, with the average cost of a house now 4.2% below the peak seen in August 2022.

The ongoing squeeze on household incomes will 'lead to a slower housing market, particularly compared to the rapid growth of recent years,' Kim Kinnaird, a director, at Halifax Mortgages said.

The trend is likely to continue through 2023 'as higher borrowing costs lead to reduced demand,' Kinnard added.