A lack of homes on the market in January has resulted in stronger than expected growth in prices, due to a high level of competition in the supply constrained market.
According to Nationwide, annual growth is up 3.2% which compares favourably with December's figure of 2.6%.
However, Nationwide asserts that the surprising increase is a one off result and that the level of activity in the market is not at a high level.
The house price index indicated that there was an increase of 0.6% in prices on average, resulting in an average price for a property of £211,756, an increase from the previous month's figure of £211,156 (Nationwide, January 2018).
According to Robert Gardner of Nationwide:
“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."
The Royal Institution of Chartered Surveyors says that it expects house price growth to be flat in 2018, with a decline in London being offset by increases in other more dynamic regions.
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'Unexpected' uptick in house price growth due to supply shortage