Annual house price growth increased to 11.2% in January, said Nationwide, up from 10.4% in December.

This was the strongest start to a year for property price growth since 2005, according to the building society.

The average UK house price is now £255,556 and prices rose 0.8% between December and January.

Robert Gardner, Nationwide’s chief economist, said: “Housing demand has remained robust. Mortgage approvals for house purchase have continued to run slightly above pre-pandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.

“Indeed, the total number of property transactions in 2021 was the highest since 2007 and around 25% higher than in 2019, before the pandemic struck.

“At the same time, the stock of homes on estate agents’ books has remained extremely low, which is contributing to the continued robust pace of house price growth.”

Rhys Schofield, managing director at Peak Mortgages and Protection, added: “December was strong, but January was by far and away our busiest month ever. Even with rate rises, owning a home is still going to be cheaper as well as more secure than renting.

“You could even say that in fraught and uncertain times, people will put even more of a premium on owning their own home.”

Market to slow

Despite the sharp growth, Nationwide expects the market to slow down this year as affordability is squeezed.

Gardner said: “House price growth has outstripped earnings growth by a wide margin since the pandemic struck and, as a result, housing affordability has become less favourable.

“For example, a 10% deposit on a typical first-time buyer home is now equivalent to 56% of total gross annual earnings, a record high. Similarly, a typical mortgage payment as a share of take-home pay is now above the long run average, despite mortgage rates remaining close to all-time lows.

“Reduced affordability is likely to exert a dampening impact on market activity and house price growth, especially since household finances are also coming under pressure from sharp increases in the cost of living.”