Lack of UK homes for sale continue to support prices in January, Nationwide says

House prices in the UK continued to rise in January, albeit at a slower pace, supported by a lack of available properties for sale.

Nationwide said prices climbed 0.2% in January compared to a month ago to an average of £205,240, following a 0.8% increase in December.

Compared to January 2016, prices grew 4.3% after December’s year-on-year gain of 4.5%.

Robert Gardner, Nationwide’s chief economist, said the outlook for the housing market “remains clouded” due to uncertainty surrounding economic prospects.

While the economy has remained far stronger than expected in the wake of Brexit, employment gains have moderated in recent months and earnings growth has slowed, the economist said.

“With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure. Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect,” Gardner said.

“On balance, we agree with the consensus view that the economy is likely to slow through 2017 as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring."

However, Nationwide expects house prices will rise about 2% over 2017, as a scarcity of homes on the market will continue to bolster prices.