House prices in the U.K. continued to grow during the final quarter of 2016 as tight housing supply and steady demand continued to prop up the market, according to industry figures released on Monday.

Average selling prices rose by 2.5% during the three months to December, when benchmarked against the previous quarter, and the highest rate of growth since March 2016, the Halifax House Price Index found. 

On an annual basis, prices were 6.5% higher than in the same period one year ago, but a rate that is below the cyclical peak of 10% that was reached in March 2016.

"House prices finished 2016 strongly," said Martin Ellis, a housing economist with Halifax.

House prices have drawn support from low levels of available supply, historically low levels of housing construction and the record low levels of interest rates.

However, forecasters have warned that price growth will likely slow in 2017 as uncertainties arising in the wake of the June's vote to leave the European Union begin to bite.

The slowdown in prices could be exacerbated by the government's anticipated move to begin the formal process of exiting the EU, marked by the invocation of Article 50 of the Lisbon Treaty, which is expected to take place before the end of March and will set the clock ticking on a two-year period of negotiations over trade and political ties.

"Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017," Ellis said.

Halifax forecast house price growth in the U.K. for 2017 to be somewhere in the region of 1% and 4%.

British housebuilder stocks were mixed on Monday, with building materials merchants deeply in the red, as investors focused on comments made over the weekend by Prime Minister Theresa May. May has suggested that U.K. industries could face restrictions when it comes to exports into the EU once Brexit has taken place.

Britain's largest house builder by volume, Barratt Developments (BTDPF) , saw its stock fall by 0.5% to 491.0 pence during early trading. Travis Perkins (TVPKF) , the nation's largest construction materials merchant, saw its shares fall by 1.5% to 1,469.4 pence. 

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