The Nationwide Building Society has reported that the annual rate of house price growth remained “broadly stable” during January 2017 at 4.3%, only just below the growth rate in December of 4.5%.

House prices increased by 0.2% over the month, after taking account of seasonal factors.

Robert Gardner, Nationwide’s chief economist, said: “The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly.

“On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote. Recent data indicates that the economy didn’t slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November.

“However, there are tentative signs that conditions may be about to soften. Employment growth has moderated, and while wage growth has edged up in recent months, in real terms (i.e. after adjusting for inflation), earnings growth has already slowed.

“With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure. Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect.

“On balance, we agree with the consensus view that the economy is likely to slow through 2017 as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring.

“Nevertheless, we continue to believe that a small rise in house prices of around 2% is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices.”

Mario Berti, CEO of Octopus Property, added: “Following its extraordinary resilience in 2016, the property market has continued to stand firm at the beginning of 2017.

“House prices may have nudged down very slightly on an annual basis but the UK property market remains stable.

“Rising inflation could play havoc with household finances, which have the potential to impact confidence and in turn property values, but borrowing costs are still exceptionally competitive.

“Where interest rates are headed in response to rising inflation could be decisive for the outlook of the property market in 2017. If they do rise, it is likely that would trigger a shift in sentiment and start to put pressure on prices.

“However, any downward pressure on prices is likely to be mitigated by continued tight supply of housing stock and demand from overseas buyers who are attracted by the current level of the pound.”