The UK's biggest mortgage lender said prices rose 18.5% over the past year, moving house price inflation below 20% for the first time in six months.

The average price of a house in the UK now stands at �160,857, down from �162,911 in September, Halifax said.

It said five interest hikes in a year by the Bank of England had "taken impetus away" from demand.

The increases have lifted interest rates to 4.75%. On Thursday, the Bank of England left rates on hold following its latest meeting.

'Slowdown'

On a quarterly basis, the Halifax said house prices fell by 0.4% between July and October - the first three-month fall since the last quarter of 2000.

The bank said recent rate rises had raised mortgage payments as a percentage of earnings, from 14% to 19% for new borrowers over the past year.

However, the level remained well below the peak of 34% in 1990.

Martin Ellis, Halifax chief economist, said: "The housing market seems to be moving into a slowdown following the period of strong growth in 2003 and early 2004.

Evidence piles up for UK housing market slow down In pictures

"The rises and falls we have seen in prices in recent months are part of the ebb and flow of the market as it finds a new base."

The Halifax survey is the latest in a growing line of surveys and official government data, which show a weakening of demand and a falling number of sales.

Recently published data from the Bank of England showed mortgage approvals in September falling to their lowest level since August 2000.

Meanwhile, Nationwide also registered a fall in house prices in October. Its latest survey said prices fell by 0.4% in October - the biggest decline since February 2001.

'Affordability constraints'

However, despite the mounting evidence of a slowdown in the housing market, Halifax said "fundamentals" remained sound.

Interest rates, while they have risen, seem likely to peak near current levels, it said.

Meanwhile employment and household incomes - two very important drivers of the housing market - were still growing.

Lack of housing supply, particularly in the south of England, would also help underpin the market.

"We expect house price growth to continue to moderate into 2005 as the Bank of England's rate increases and first-time buyer affordability constraints dampen demand," said Mr Ellis.