Mervyn King, the governor of the Bank of England (BoE), has said he is looking forward to steady growth and low inflation after describing Britain's housing market as being in a "very satisfactory position".

Mervyn King, the governor of the Bank of England (BoE), has said he is looking forward to steady growth and low inflation after describing Britain's housing market as being in a "very satisfactory position".

Britain's annual inflation rate fell back to the Bank of England's two per cent target in December – a figure that has fallen from 2.5 per cent since September 2005.

Mr King said housing market activity could pick up and house prices stabilise after the rate had fallen for the fourth consecutive month.

"If we can keep this broad stability of the economy that we've experienced now for over ten years then there shouldn't be very sharp or sudden changes in the finances of homeowners or indeed anyone else from year to year," Mr King told Kent radio station KMFM.

Global Insight's economist, Howard Archer, was also of the opinion that the UK property market is beginning to "firm" but added that house price gains might be "relatively limited" over the coming months.