The average price of a residential property in the UK hit an all-time high of £276,759 at the start of 2022 after increasing by around £24,500 over the past 12 months, according to Halifax.

However, with household budgets under pressure from growing living costs, it is likely the pace of property price growth will slow considerably over the next 12 months, Halifax said.

House prices were up by 9.7% in January compared with a year earlier. But the pace of monthly growth slowed last month, with values edging up by 0.3%, compared with 1.1% monthly increases recorded in both November and December.

Jason Tebb, chief executive officer of OnTheMarket, said: “While some of the heat of last year has tailed off, there are still good numbers of buyers keen to move. January saw a rise in terms of new applicants, viewings and valuation requests, as motivated buyers and sellers who didn’t make the move last year remain keen to do so.

“It’s uncertain whether last week’s interest rate rise, coming so soon after the first rate increase in more than three years, will impact buyer confidence, particularly given greater pressure on budgets from an increase in the cost of living. But with mortgage rates still comparatively cheap and many on fixed-rate products, positive sentiment should prevail for now although it’s possible that the growth in average prices may continue to slow over the next few months. However, that may not be such a bad thing as the true health of the housing market is better measured in transaction volumes than in house price growth.”

Nathan Emerson, Propertymark CEO, commented: “It will be interesting to see how consumer confidence will be affected by last week’s first back-to-back interest rate rise since 2004 and the added pressures on household budgets that are coming down the line.

“But as it stands prices remain inflated by a continued lack of stock, with our member agents reporting that the number of offers they are receiving on properties per month can be well into double figures and that sales are continuing to be agreed at over the asking price.

“Lack of stock is an issue across all four UK nations and some agents say they are as much as 40-50% down on last year. This is backed up by data in our final Housing Market Report of 2021 which showed a month-on-month reduction in the number of new instructions.

“Until that trend begins to reverse, I would not expect to see any significant dampening of property prices.”

North London estate agent Jeremy Leaf said: “Though price growth is slowing, these figures demonstrate the underlying strength of the market and how likely it is to withstand increasingly stretched affordability.

“We know from what’s happening on the ground that the double-whammy of rising inflation and interest rates are already prompting some who thought prices could only go one way to request valuations and make properties available for sale.

“On the other hand, supply still can’t keep up with demand, especially for family houses, and with around 50 per cent of homes owned outright there are many who are relatively unaffected by interest rate rises.”

Guy Gittins, CEO of Chestertons, commented: “London’s property market has continued to see record numbers of buyers throughout January. A strong indication that the market will remain at high activity levels in the first half of this year. Whilst larger properties or homes with outside space remain sought-after, apartments in some of London’s more central boroughs are experiencing a steady comeback. This is particularly driven by professionals who are returning to the office and are seeking a home nearby.”

Founder and CEO of GetAgent.co.uk, Colby Short, said: “There’s not a soul in the land that can state they’re firing fully on all cylinders during January and the UK property market is no different. However, despite what is usually the quietest time of year, the market has still inched forward to post yet another record level of house price growth.

“As the cogs start to turn once again, we can expect more of the same and while affordability remains a burning issue, high demand and a lack of stock will ensure house prices remain robust over the coming year.”

Managing director of Barrows and Forrester, James Forrester, commented: “We’re now starting to see transactions return to pre-Covid levels but while the outlooks for the year ahead may be less manic, we’re unlikely to see any significant decline in house prices.

“This may seem surprising against a backdrop of increased living costs, interest rate increases and the ongoing issue of affordability, but there remains a huge level of motivated buyers fighting it out for what is essentially a limited level of stock.

“With these scales unlikely to tip the other way anytime soon, it certainly remains a sellers market and they will continue to secure a very good price for their property when bringing it to market.”

Nicholas Finn, managing director of Garrington Property Finders, commented: “It says a lot about the heat in the housing market when a single month in which house prices don’t rise by a full 1% is a slowdown.

“In absolute terms, this is the mildest cooling of price inflation. In the 12 months to the end of January, prices rose by a breathless 9.7%, just as they did across 2021 as a whole.

“Nevertheless economic gravity is starting to make itself felt. The pandemic-inspired Great Relocation is still in full swing, and the number of would-be buyers remains healthy – with the number of first-time buyers entering the market at record levels.

“Average prices are still being driven upwards by the mismatch between supply and demand, but many buyers are starting to look again at their budget as the rapidly rising cost of living eats into their disposable income.

“With rising interest rates also making mortgages more expensive, buyers are becoming increasingly tactical in the offers they make. As a result, sellers in the most overheated markets are starting to have to rein in their pricing aspirations.

“On the front-line we’re also seeing activity pick up dramatically in London. Prices in the capital grew by 4.5% in the 12 months to the end of January, and while this is modest by national standards, annual price growth in London has doubled in a month as the ending of pandemic restrictions gives a growing sense that Britain’s big cities are back in business.”

House price growth slowed in January