The average price of a UK property has now reached £163,748, Halifax said.

Housing experts are split on prospects for the market, with some saying price growth will slow but not fall, while others predict a sharp drop in values.

The Halifax said recent measures indicated that "the market is undergoing a measured slowdown".

"House prices have increased by only 1.4% over the past six months, causing the annual rate to decline from a peak of 22.1% last July to 13.7% in January," said Martin Ellis, Halifax chief economist.

In December, the Halifax forecast that UK prices would fall by 2% in 2005.

Geoffrey Dicks, UK economist at Royal Bank of Scotland (RBS) financial markets, described the Halifax result as "surprisingly strong".

"The Halifax is up over 2% in two months, the average price is at an all-time high, the losses of October and November have now been fully unwound," Mr Dicks added.

Interest rate moves

Last week, the Nationwide building society said its latest house price survey showed prices rose by 0.4% in January, but the annual rate of increase fell slightly to 12.6% - its lowest rate in three years.

The society added that after six months of "price stability", there were indications that "sentiment may be about to turn positive".

The Bank of England's Monetary Policy Committee (MPC) will meet on 9 February to decide whether UK interest rates should rise from their current level of 4.75%.

Any resurgence in UK house prices could prompt a rise in interest rates.

The MPC has increased interest rates five times in the past fifteen months but has kept them on hold since August.

Article courtesy of www.bbc.co.uk