The market slow-down of last year was offset this month by a shortage of properties offered for sale. This is believed to have led to a slight rise in house prices at fastest pace in 10 months, according to the latest monthly survey by the Nationwide Building Society.
The increase of 0.6 per cent at the beginning of the year raised the annual figure by 3.2 per cent, claims the Nationwide Building Society. Though modest and far below previous years, it's the fastest growth since March 2017, when it was 3.5 per cent.
Pay growth may have something to do with this. The narrowing gap between inflation and the rate of wage increase made last year's pay growth of 1.4 per cent the slowest in two years. To top it all, the British Chambers of Commerce downgraded its outlook for the UK economy, expecting a rise of only 1.1 per cent in 2018, and 1.3 per cent in 2019, respectively.
With consumer incomes squeezed by higher inflation, and with slower economic growth, the property market is visibly affected by the 2016 referendum.
The Royal Institution of Chartered Surveyors recently revealed the results of the UK Residential Market Survey. It concludes that demand has stabilised and there's little scope for improvement in 2018.
The flat sales activity went hand-in-hand with a decline in the number of mortgage approvals. Mortgage lending fell to its lowest level since 2015. This double whammy of lower availability for both properties and loans seems to be responsible for a marginal rise in the average house price in January.
Though the average property costs only £600 more now than it did last year, the rise to £211,756 was abrupt. This house price inflation surprised even Robert Gardner, Chief Economist at Nationwide, who attributes it to lack of supply.
The flow of new property listings has been "more of a trickle", he claims, "than a torrent". He attributes this unexpected price acceleration to a lack of new home supply. But as the number of new homes coming onto the market is lagging behind demand, the shortfall could continue to bolster house prices sporadically this year.
Still, experts say the overall trend is for growth to decelerate and even decrease in real terms. Various forecasters predicted a housing market slow-down to about 1% in 2018. This would actually bring property values down when you adjust for inflation. Nationwide maintains its price growth forecast at 1-1.5% this year.
Moreover, house prices are likely to grow unevenly across the country. London property prices, for instance, suffered a 1.8 per cent decline in 2017. December was particularly harsh, with a 3.7 per cent drop in London. In 2018, prices are expected to drop by another 2 per cent, according to Rightmove.
Director Miles Shipside expects to see the pace of price rises slowing again this year. He predicts a house price rise of only 1 per cent nationally this year, the weakest since 2011. He also puts it down to a squeeze on consumer income in the wake of the Brexit vote and a sluggish economy overall.
Chris Scicluna, Head of Economic Research at London's Daiwa Capital Markets Europe, said it's unlikely that a rise as sharp as this will occur again this year. But a steady house price growth is possible, he says, with attractive mortgage rates, high employment, moderate inflation, and continued limited supply. So far, everything is falling into place.
Separate reports recently revealed that home ownership in England was at a 30-year low in 2017. The government's housing survey showed that an estimated 62.6 per cent of the population is owner-occupier, down 0.03 per cent from 2017, and similar to levels seen in the mid-1980s.
More worryingly, only 37 per cent of young adults aged 25 to 34 own their home today. Scrapping stamp duty for first-time buyers this year may tilt statistics in their favour, but higher tuition fees and childcare costs could offset that modest advantage.
Meanwhile, Visa's consumer spending index for the UK fell three months in a row to 0.9 per cent at the end of last year. So, shoppers will be getting less bang for their buck than they ever have in the past six years. Will it apply to houses, too?
With stagnating home supply, a decrease in mortgage approvals, and the probability of a relatively high employment rate until Brexit, there doesn't seem to be anything amiss with expert forecasts for stable - albeit slowing - growth. Hopefully, nothing more happens this year to tip those scales.