House prices increased again in the 12 months to January, albeit at a reduced rate compared with a month earlier, the latest Office for National Statistics figures show.

The average price of a residential property increased by 9.6% in the year to January, down from 10% in the year to December.

The average price of a home now stands at £274,000, which is £24,000 higher than at the corresponding period last year.

House price inflation remains at high levels despite the cost-of-living crisis and mortgage rates increasing.

Emma Cox, managing director of real estate at Shawbrook, said “House prices continue to challenge any sense of normality despite rising inflation and the soaring cost of living forcing a reality check to buyers’ budgets. Record prices and undiminished demand is putting the pressure on buyers that aren’t seeing their money go as far across the board.

“Yet, the outlook does remain positive for those looking to sell. The market remains firmly in favour of those with capital available and looking to add to portfolios or let out properties.”

Wales saw the greatest rise in property prices over the past 12 months, with the average cost of a home rising by 13.9% to £206,000.

Scotland, England and Northern Ireland saw average prices rise 10.8%, 9.4% and 7.9% respectively. London continues to be the region with the lowest annual growth, at 2.2%.

Nicky Stevenson, managing director at Fine & Country, said: “A modest tightening in house price growth has been expected for some time with challenges building across the broader economy.

“Affordability has been stretched by a spike in inflation and the consequential upward pressure on interest rates.

“While the effect of escalating tensions across Europe remains uncertain, energy market volatility may continue to erode household budgets in the months ahead.

“However, the effect of this on house price growth will continue to be mitigated by supply issues with too many buyers chasing too few homes, and not nearly enough new listings to satisfy current demand.”

House prices and demand from buyers have jumped significantly, driven by high levels of appetite for moving home, according to Nick Leeming, chairman at Jackson-Stops, who says this is something his firm is seeing across many of its branches.

He commented: “Homeowners looking at their next move are pressing forward and across Jackson-Stops branches new instructions in January were 14% higher than the same month last year.

“With prospective buyers now often ready to transact quickly with their own home prepared for sale and finance arranged upfront, selling property in the first half of this year should ensure that vendors are well-placed to capitalise on a still buoyant market.

“Of course, concerns around higher costs of living and rising interest rates may serve to modify price rises over coming months, but the market has continued to defy expectations over the last two years, and it remains to be seen whether any significant readjustment will take place.”