House prices started the year on a strong footing, rising by 1.2% across the UK during January, figures showed today.
The latest increase, which was more than double the 0.5% rise seen in December, left the average UK home costing £163,481, a level last seen in August 2008.
The rise pushed annual house price growth up to 8.6%, compared with 5.9% in December, said Nationwide Building Society.
The group said that, unless there was a fall in house prices during February, annual house price inflation was likely to move into double digits next month for the first time since May 2007.
Martin Gahbauer, Nationwide's chief economist, said: “House prices strengthened their upward momentum at the start of 2010, increasing by a seasonally adjusted 1.2% month on month in January.”
Some commentators thought that house prices would fall during the early part of this year, as the market slowed down after people rushed to complete transactions of lower value properties before the Government's stamp duty holiday finished last month.
Nationwide had also reported that the monthly rate at which prices were rising had either fallen or stayed the same during the past four months.
But January's strong increase suggests the current imbalance between supply and demand is continuing to support prices.
Figures from the British Bankers' Association, released earlier this week, also showed that the number of new mortgages approved for house purchase rose to its highest level since September 2007 during December.
However, despite the current buoyancy, many commentators expect house prices to end 2010 at around the same level they started it, rising during the early part of the year, before falling back again during the second half.