“Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging,” he said.

Many prospective buyers have struggled to build up deposits, with paltry saving rates on offer and high rates of inflation eating into the value of their pots. 

Mr Galley added: “This situation is expected to become more acute in the short term as household budgets face even greater pressure from an increase in the cost of living, and rises in interest rates begin to feed through to mortgage rates.”

Mortgages have already become more expensive as the Bank of England battles rising inflation. Last week the Bank Rate rose by 0.25 percentage points to 0.5pc, pushing up monthly bills for households with standard variable and tracker-rate mortgages. 

The Bank Rate is likely to increase even further this year. Four of the nine members of the Monetary Policy Committee wanted to increase the Bank Rate to 0.75pc, rather than 0.5pc. Economists expect that interest rates will rise on three further occasions this year. The next decision will be made on Mar 17.

Tomer Aboody, of the property lender MT Finance, suggested the Government should take extra steps to introduce more stock onto the housing market. 

“We need to encourage more homes to be sold,” he said. “A restructure of stamp duty levels might just help with that, encouraging downsizers to make a move by reducing the duty they need to pay.”

But Karen Noye, of the wealth manager Quilter, said while house prices had slowed, it was unlikely they would fall significantly.

“A huge drop in property prices is probably not on the cards unless something completely unforeseen happens,” she said. “At present the country is still suffering from a lack of housing stock and the laws of supply and demand will keep house prices relatively high for the time being.”

Halifax said that London remained the weakest performing area in the country. Meanwhile, Wales was the strongest performing nation and region, with annual house price inflation of 13.9pc. The average price for a property in Wales was £205.253.

Last year, historically low interest rates combined with a stamp duty holiday boosted the housing market, but Halifax found that transaction volumes had begun to return to pre-pandemic levels.