House price growth steadies in January but demand spike expected

Most wanted: Low unemployment and borrowing costs pump up demand for properties

Gareth Fuller/PA

Joanna Hodgson27 January 2016

Builders could struggle to keep up with demand for homes and keep prices high despite a January cooling in the market, lender Nationwide has warned.

Average house price growth eased to 0.3% this month from December's eight-month high of 0.8%, according to the mortgage lender.

The average house price now stands at £196,829.

Annual growth in January was stable, but demand for properties is expected to jump as buyer confidence is boosted by the lowest unemployment rate in a decade and low borrowing costs.

Nationwide’s chief economist Robert Gardner added: “The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”

Londoners are among those hardest hit by dwindling housing stock, which across Britain has almost halved in 10 years, according to separate data published by the National Association of Estate Agents on Wednesday.

Managing director Mark Hayward said: “When there is such a huge and widening gap between supply and demand, a level playing field seems further out of reach for many would be house buyers.”