House prices recorded their 13th successive monthly increase in January, rising by 0.7% on the month, the Nationwide Building Society has reported.

The price of a typical home was 8.8% higher than January 2013.

House prices are around 4% below their 2007 peak. The average price of a home is now £176,491.

Robert Gardner, Nationwide’s chief economist, said: “There have been encouraging signs that activity levels in the housing market are also gradually returning towards more normal levels. According to HMRC, the total number of housing transactions increased to 103,000 in December, 30% higher than the same month in 2012. The pickup in activity appears to be fairly broad-based, and it is encouraging that first time buyers are a key driving factor behind the upturn.

“First time buyers are the lifeblood of the housing market. As well as accounting for a significant proportion of housing transactions (historically around 40% of transactions involving a mortgage), they also play an important role in the wider market, for example in helping to complete chains, enabling those that already own a property to move.

“For this reason, it is particularly encouraging that first time buyer numbers have been rising strongly in recent quarters. Indeed, at 73,700 in Q3 2013, they were up 32% compared with the same period in 2012 and accounted for around 44% of activity – close to an all-time high as a share of lending activity.

“At present, the typical first time buyer home costs 4.6 times average earnings. While this is above the 20 year average of 3.6 times earnings, it is well below the highs of 5.4 recorded in 2007.

“Moreover, thanks to the decline in interest rates, lower house prices (currently 4% below their 2007 peak) and a modest increase in nominal earnings, the typical mortgage now accounts for around 19% of borrowers’ average monthly earnings, below the 24% recorded before the financial crisis and slightly below the long term average.”