House price growth remained steady during January with the average cost of a home rising by 1.7 per cent.

The increase, which was only slightly below the average gain of 1.8 per cent during the past three months, pushed the average cost of a home up to £117,905.

Nationwide said annual house price inflation rose to 26.5 per cent for the year to the end of January, up from 25.3 per cent in December, although this was mainly due to prices rising at a more modest pace a year ago.

But, despite the strong figure, the building society still expected the rate of house price rises to slow later this year.

Alex Bannister, Nationwide's group economist, said: "With the current trend in growth stable and strong, we would expect the annual inflation rate to remain around 25 per cent for the next couple of months.

"However, between April and September last year house prices rose by a cumulative 15.5 per cent or an annualised rate of 33 per cent.

"We do not expect to see this strength repeated this year and the annual rate of inflation should decline significantly in this period."

House sales remained high during December, contributing to a total of 1.6 million properties, the equivalent to one in ten homes, changing hands.