House prices show surprise growth jump in January
Home values increased by 0.6% month-on-month in January taking the average house price to £211,756.
Experts described the uptick in annual growth as surprising, given the level of sales and consumer confidence over the Christmas period.
Mortgage approvals also dropped to their lowest level in almost three years at the end of December.
Short supply and low mortgage rates are helping to shore up demand and values, according to Robert Gardner, Nationwide’s chief economist.
He said: “Activity has been subdued on both the demand and supply side of the market.
“The flow of properties coming onto estate agents’ books has been more of a trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house prices.”
The property outlook
However, some critics said rising growth does not come as a shock.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “This uplift is not really surprising to us at all bearing in mind the increase in viewings estate agents are seeing as the market emerges from its winter hibernation.
“At the sharp end we have seen an uplift in terms of viewings and more confidence than we dared to expect.
“Looking forward we have to now make sure as many of those enquiries as possible translate into sales, which will be the real test for the market this year.”
The performance of the property market in 2018 depends upon the economy, according to Gardner.
He added: “Brexit developments will remain important, though these remain hard to foresee.
“We continue to expect the UK economy to grow at a modest pace, with annual growth of 1% to 1.5% in 2018 and 2019.
“Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.”