House price growth set to halve next year as Halifax sees 'notable cooling' of buyer interest in the capital Halifax predicts house prices to rise 3%-5% across UK in 2015 Property values were rising by 10% annually in July 2014 Probable rate rises and affordability crunch behind curbing of spiralling prices and demand By Natalie Wain for Thisismoney.co.uk The rate of house price growth will halve next year as the top end of the London market cools off and property values begin to stabilise across the country, a new report claims. In its housing market outlook for next year, Halifax predicts house prices will increase by around 3-5 per cent across the UK in 2015, markedly lower than a year-on-year growth peak of 10.2 per cent in July this year. According to the lender, the prospect of a hike in interest rates at some point, coupled with a deterioration in affordability in the past year, will be key factors in curbing spiralling prices and demand. More for your money: The rate of house price growth will halve next year as the top end of the London market cools off, and property values begin to stabilise across the country, a new report claims By October this year, the annual rate of growth had fallen back to 8.8 per cent, down from 9.6 per cent in September, with the typical price of buying a house in the UK standing at £186,135. The lender also predicts that global economic tensions will curb appetite at the top end of the London market in 2015, leading to the market being more evening matched throughout the regions. It said that an increase in the level of house building, coupled with a rise in earnings in real terms, will help achieve 'a more even regional pattern in house price growth during 2015.' Martin Ellis, Halifax's housing economist, said: 'House price growth in the UK during 2013 and 2014 has been very much led by London - and to a lesser extent - the rest of southern England. With mortgage affordability in London now worse than its long run average, there has been a notable cooling of buyer interest in property in the capital in the last few months. Global economic worries could also reduce demand and activity at the top end of the London market in 2015. Outside the South East and London, house prices do not appear markedly out of line with fundamentals. We, therefore, expect to see a more even regional pattern in house price growth during 2015. Tighter affordability checks for mortgages have also acted as a brake on activity, he said. The Mortgage Market Review rules, which came into force in April, mean that home buyers and people looking to remortgage have to provide more detailed evidence to prove that they can truly afford their mortgage repayments. A separate report released by the Intermediary Mortgage Lenders Association suggests that the stricter rules have led to some people aged in their 40s struggling to access a mortgage because of concerns that they could still be paying off their home loan when they reach retirement. Halifax said that the looming general election next spring could also disrupt activity in the early months of 2015. Reality check: The MMR rules, which came into force in April, mean that home buyers and people looking to remortgage have to provide more detailed evidence to prove they can truly afford mortgage repayments Further signs of a cooling housing market emerged yesterday with two separate reports suggesting a slowdown in mortgage lending. Nationwide said gross mortgage lending had fallen by £900million as Britain's biggest building society released its latest set of financial results, while the British Bankers' Association said mortgage approvals for house purchases fell for a fourth month in a row to a 17-month low of 37,076 in October. Meanwhile, expectations about exactly when the Bank of England base rate will start to increase from its 0.5 per cent low have been pushed back towards the later part of next year. Even when the rate rises start to kick in, they are expected to be smaller than previously expected, Mark Carney told MPs yesterday. Speaking to the Commons Treasury Select Committee, the BoE governor said that while 'the next move in policy is going to be an increase', the combination of low inflation and the international slowdown meant that 'the cumulative tightening over the forecast period is likely to be less than previously thought.' Mr Ellis said that looking beyond 2015, income growth is expected to start catching up with the pace of house price increases as steady interest rate rises will start to act as a stronger constraint on house prices. Signs of a recovery in the house building industry should also help to bring the demand for homes and their supply into even better balance in the longer term, which will also curb the upward pressure on prices, he said.