House prices in the UK are expected to see growth slow to 4-6% next year, according to the Halifax, which blames the increasing difficulty that young people have in getting on the housing ladder, together with the prospect of an interest rate rise next year.

The forecast comes after a year when activity levels have remained modest by historical standards. A shortage of supply is likely to continue to act as a significant constraint on activity in 2016, it says in its outlook report.

Price growth is expected to slow more sharply in London than elsewhere but all regions are still expected to experience price rises in 2016, which will be broadly in line with income growth.

The report points out that levels of house building remain low, but improvements are expected over the medium term and this would help to bring demand and supply into better balance, helping to constrain upward pressure on house prices.

“There is little reason to expect any fundamental shift in the key market drivers in the immediate future. As a result, the substantial imbalance between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016,” said Halifax’s housing economist, Martin Ellis.