House prices surged by 7.3% annually in January but the rate of growth continued to edge down slightly from a previous six-year high, Halifax has reported.

On a monthly basis, property values increased by 1.1%, taking the average UK price to £175,546 and reversing a 0.5% month-on-month drop seen in December.

In Brighton and Hove the average price is close to £300,000.

Annual price growth has been drifting down slightly since a 7.7% uplift in November, which was the strongest year-on-year increase in six years.

In December, prices rose by 7.5% year-on-year.

Jason Brand, president of the Brighton and Hove Estate Agents Association, said: ”We are experiencing the strongest market I’ve seen in Brighton and Hove in ten years, buyers are up a staggering 50% in 2014 which has resulted in continued growth on house prices which is set to continue for the rest of 2014.”

Martin Ellis, a housing economist for Halifax, said the continued squeeze on household finances as wages fail to keep up with the pace of inflation is ”expected to remain a constraint on the rate of growth of house prices”.

Prices in the three months to January were 1.9% higher than in the preceding quarter, which the study said was in line with recent increases.

Halifax said this quarterly figure tends to give the clearest indication of the overall market trend, as it smooths out monthly volatility.

Halifax said that despite people's finances continuing to be constrained, the lack of homes coming on the market will continue to put an upward pressure on prices.

It pointed to recent findings from the Royal Institution of Chartered Surveyors (Rics) that the increase in people putting their homes on the market at the end of 2013 was still some way short of that needed to cope with the growth in demand.

Mr Ellis continued: ”With the supply of properties being slow to respond to more buoyant market conditions, stronger demand has resulted in continued upward pressure on house prices.

”Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy is recovering and unemployment falling faster than expected.”

Government support schemes such as Help to Buy, which are particularly aimed at giving people with small deposits a helping hand on or up the ladder, have also helped to boost housing demand by widening access to ultra-cheap mortgage deals for creditworthy borrowers.

But concerns have been raised that the improving economy could lead to a sooner-than-expected rise in interest rates, which will push up borrowers'

mortgage costs.

Fears have also been raised over the last week that the London market in particular, which continues to see strong interest from wealthy overseas investors, could be starting to show signs of ”bubble-like” conditions.