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Property investors are today welcoming a report from the Nationwide building society which says that house prices have risen by 1.4 per cent in January.

While Hometrack this week referred to modest house price increases of only 0.1 per cent in some areas of the UK, Nationwide’s statistics indicate that January saw the biggest monthly rises since July 2004.

This has served to reaffirm the general consensus that the UK property market is once again extremely strong having coped admirably with a series of challenges in 2005.

Remarkably, the latest increase takes the annual rate of house growth to 4.4 per cent, as the strength of the property market surprises even the most optimistic of investors. The three months from November were particularly impressive, with growth of 1.8 per cent against the previous three months.

Nationwide has indicated that consumer confidence has been the key factor in this turnaround, an observation that has been made repeatedly in recent months. As first time buyers return to the market and investors once again find they can make significant gains on their outlays, there has been a sense of buoyancy for some weeks and the Nationwide report will only add to this optimism.

The average price of a house in the UK is now 158,478 GBP’s, according to Nationwide, with “pent up demand” following the cut in interest rates in August leading to a surge in activity over the usually quiet Christmas months.

“This is the strongest monthly rate of growth since July 2004 when it was 1.9 per cent and the annual rate of house price inflation was more than 20 per cent,” said Nationwide group economist Fionnuala Earley.

“The annual rate of house price inflation in January 2006 is a more modest 4.4 per cent.

“Even so, this is a significant increase in price and confirms the strengthening trend we have seen since October,” she added.

With Nationwide pointing out that the last four months have been responsible for around three quarters of the annual price rises, the future certainly looks bright for property investment in the UK, although Ms Earley has said that prices may be bridled in 2006 by factors including pension fears, declining consumer appetite for debt and below average economic growth.

According to the Bank of England, mortgage approvals are also exceptionally high at the moment, with the 122,000 loans for house purchases in December up from 116,000 in November. Both figures reflect a considerable increase on the 106,000 average for the previous six months and it is the highest number since May 2004.

Story from Assetz news