House prices were 5.1 per cent higher than a year earlier, marking the smallest increase seen since a 4.6 per cent year-on-year rise in July 2013, Halifax said.
Across the UK, house prices are now increasing at around half the rate seen a year ago. In March 2016, annual house price growth stood at 10 per cent.
Property values increased by 0.1 per cent between January and February following a 1.1 per cent monthly fall in January.
Martin Ellis, a housing economist at Halifax, said: “Housing demand is being supported by an economy that continues to perform well with employment still expanding. Meanwhile, the supply of both new homes and existing properties available for sale remains low. This combination is pushing up prices.
“The annual rate of house price growth has, however, nearly halved over the past 11 months. A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home.
“This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.”
Howard Archer, an economist at IHS Markit, said: “February’s slight rise in house prices reported by the Halifax fuels our belief that house price gains over 2017 will be no more than 3 per cent and could well be less.
“Weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on house prices.
“However, a shortage of supply is likely to put a hard floor under prices.”