House prices up 1.2 pct in January

The mortgage lender said that house prices rose by 1.2 percent this month, more than twice the 0.5 percent gain seen in December and the biggest advance since August. Analysts had forecast a 0.3 percent rise on the month.

That took annual house price inflation to 8.6 percent from 5.9 percent last month, the highest since October 2007 and following double-digit declines in many months last year.

"Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007," said Martin Gahbauer, Nationwide's chief economist.

The British economy only just came out of its worst recession since at least the Second World War in the final three months of 2009, with output increasing by a meagre 0.1 percent.

But buoyed by official interest rates at a record low of 0.5 percent and a lack of homes coming on to the market, the country's housing market has recovered quite quickly from the sharp falls in prices seen over 2008 and 2009.