Annual house price growth reached 4.1% despite only rising by 0.1% in January, Nationwide’s House Price Index has revealed.
This means growth has dropped since December, when prices rose by 0.7%.
Tomer Aboody, director of specialist lender MT Finance, said: “With Nationwide’s numbers further indicating a confident market, actual growth in prices is very minimal as buyers face a challenging period due to affordability.
“Although rates remain reasonable, many in the market were hoping for a further cut by now, and are hopeful it won’t be long before we get one.
“More flexibility is needed from lenders in order to help buyers onto the ladder, and many are questioning whether the Chancellor’s growth message is realistic as little help has been evident so far.”
Average house prices stand at £268,213 – not far off the record highs hit during the pandemic.
The housing market is expected to see busy activity ahead of the stamp duty thresholds changing after 31 March. The threshold where buyers start paying tax will drop from £250,000 to £125,000, or from £425,000 to £300,000 for first-time buyers.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “The first half of the month was a bit slow but it has turned out to be a busier January than normal.
“The stamp duty holiday has helped, with an increase in sales agreed in those chains where there is a first-time buyer keen to take advantage of the discount before the end of March. While this has been welcome, there is concern that one the stamp duty holiday ends, there will be a dip in activity and transactions.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Price growth is softening, partly in response to a new year bounce in supply but also as the impact of the spike in first-time buyer demand prompted by April’s withdrawal of the stamp duty concession falls away.
“Looking forward, although wages have been outpacing inflation over recent times, which has helped to boost confidence, affordability concerns have never gone away. The market remains tight and little change is expected over the next few months at least, irrespective of any possible interest rate reductions.”