Halifax has reported that house prices in January were 4.1% higher than in the same month a year earlier.
On a monthly basis, house prices rose by 0.4%.
In the latest quarter (November to January) house prices were 2.3% higher than in the preceding three months (August to October).
The average price of a home is now £240,054, Halifax said.
Russell Galley, managing director at Halifax, said: “House prices kicked off the year with a modest monthly increase, rising by 0.4% in January following the stronger gains of 1.8% and 1.2% seen in December and November respectively. As a result, annual growth remained relatively stable at 4.1%, up just a fraction from the end of 2019.
“A number of important market indicators continue to show signs of improvement. We have seen a pick-up in transactions with more buyer and seller activity consistent with a reduction in uncertainty in the UK economy. However, it’s too early to say if a corner has been turned. The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year, but was delayed by economic uncertainty. So while housing market activity has undoubtedly increased over recent months, the extent to which this persists will be driven by housing policy, the wider political environment and trends in the economy.
“Looking ahead, we still expect a moderate rate of house price growth over the course of the year. Demand is likely to continue to exceed the supply of properties for sale across the UK, with the subdued pace of new building also adding to upwards price pressure. The environment for mortgage affordability should stay largely favourable. However with the growth in rental costs accelerating, many first-time buyers will continue to face a significant challenge in raising necessary deposits.”
David Westgate, group chief executive at Andrews Property Group, added: “The property market didn’t shoot out of the blocks in January but all the signs are positive and we expect demand to go from strength to strength during the Spring.
“In the past week alone, since we formally exited the EU, activity levels and sentiment have picked up even more.
“It’s like people have had a weight taken off their minds. The pent-up demand in the market that has grown over the past three and a half years is now really starting to come through.
“The aspirational buyers who have been missing for so long have also returned in force.
“February will be the real test of confidence but with interest rates still at record lows and the jobs market resilient, the outlook is favourable.”