The number of homes on the market fell to lowest recorded level during first weeks of 2015 Reuters

House prices rose by more than 2% last month as demand for property outstripped supply, according to property website Rightmove.

Asking prices for homes could push up further as "grey savers" take advantage of new pension rules, the property website predicted.

The latest rise comes after the number of homes on the market fell to its lowest recorded level during the first weeks of 2015, based upon the average number of properties on estate agents' books.

A tax break for older people who want to invest their savings in to buy-to-let houses could bump prices even higher, it was predicted.

"Agents are already reporting preliminary enquiries from retirees planning to cash in their pension pots and invest in buy-to-let properties," said Rightmove director Miles Shipside.

The average price for a home in Britain stands at £279,000. But in London where homes are more expensive than anywhere else in the UK, typical prices fell most steeply in January.