The annual rate of house price growth has picked up, according to the Nationwide house price index.
Prices grew by 3.2 per cent at the start of 2018, compared with 2.6 per cent at the end of 2017, and house prices increased by 0.6 per cent over the month, after taking account of seasonal factors, which is the same increase recorded in December.
"The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months. Retail sales were relatively soft over the Christmas period, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll," said Robert Gardner, Nationwide's chief economist.
"Similarly, mortgage approvals declined to their weakest level for three years in December, at just 61,000. Activity around the year end can often be volatile, but the weak reading comes off the back of subdued activity in October and November (monthly approvals were around 65,000 per month compared to an average of 67,000 over the previous twelve months). There are few signs of an imminent pickup, as surveyors report that new buyer enquiries have remained soft in recent months.
"But 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 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."
Gardner said the future of the housing market is largely dependent on developments in the wider economy.
"Brexit developments will remain important, though these remain hard to foresee," he added.
"Pent up demand appears to have shot off like a coiled spring as soon as New Year was out of the way," said Lucy Pendleton, founder director of estate agents James Pendleton.
"Estate agents famously watch January like a hawk for signs of buyers and vendors flooding back into the market and kickstarting activity. That's exactly what they've done, causing prices to bunny hop up as buyers compete for stock."
London was the only region to see a decline in property prices year-on-year in December, and today Pendleton said the capital "is still buoyant but only in certain bands".
"Those homes that are not quite so desirable still require a motivated seller willing to negotiate if they’re to sell quickly but that’s been the case for a few months now," she added.