Average house prices are forecast to rise 1% over 2006, according to housing research company Hometrack.
The company said that a continued decline in the number of sales in 2006 was expected to act as a support to prices.
The 1% rise comes after a 1.3% fall in prices predicted by Hometrack for 2005.
Richard Donnell, the company’s director of research, said: “House price growth over 2005 is likely to be the lowest for a decade.
Although activity levels may have improved over the autumn on the back of more realistic pricing, it does not automatically follow that prices will start to rise.”
Hometrack has estimated that house prices will rise by an average of 2.1% a year over the next three years, with the best prospects for growth in London, the South-east and Scotland. It added that small price falls in 2006 were expected in most other regions.
Donnell said the announcement about self-invested personal pensions in the pre-Budget report had no impact on these forecasts because the original proposals on SIPPs were expected to have a limited impact on the housing market overall.