Annual house price growth reached 4.5% after seeing a month-on-month rise of 0.6% in February, figures from Nationwide’s House Price Index reveal.
The report indicated that the average house prices rose to £205,846 in February from £205,240 seen at the start of the year.
Robert Gardner, chief economist at Nationwide, said: “The outlook is uncertain, but we, along with most other forecasters, expect the UK economy to slow through 2017 as heightened uncertainty weighs on business investment and hiring.
“In our view, a small rise in house prices 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.”
According to the report more households in England now own outright than with a mortgage and the report continues to highlight the importance of cash buyers.
Gardner added: “Cash buyers are a more important driver of housing market dynamic than they were a decade ago.
“The rise in cash share to an all-time high of 38.9% in the first quarter of 2016 was due to the introduction of stamp duty on second homes from April 2016.
“As the UK population ages, so the proportion of people who own their home outright has increased and when these people transact they are more likely to do so with cash.”
House prices in the capital have now reached more than double the level of the rest of the UK according to the report, with the average currently at £473,073.
Russell Quirk, founder and chief executive of eMoov.co.uk, said: “The UK market has come out of the blocks slow but steady for 2017 and has continued to see upward price growth, shaking off January’s lowest rate of increase in 14 months.”
And Alex Gosling, chief executive of HouseSimple.com, added: “It’s been a stable if unspectacular start to 2017 as we come into a crucial period for the housing market.
“While it stood up remarkably well in the face of some pretty strong economic headwinds in the second half of last year, sales over the next couple of months will set the tone for the year.
“The market needs a confidence boosting spring period particularly as the possibility of Article 50 being triggered looms on the horizon.”
Jonathan Hopper, managing director of Garrington Property Finders, said: “The acute lack of supply is steadily nudging up average prices, but pragmatic vendors have long since grasped that this is anything but a seller’s market.
“The result is that despite the continued rise in average asking prices, astute buyers are increasingly able to ask for, and secure, sizeable discounts.
“Buyer confidence is not unlimited, and on the front line we’re seeing that buyers, though committed, are highly price-sensitive.
“The steadily improving picture painted by February’s index is likely to set the tone for the year ahead. On this evidence we expect to see further price rises, but at a more subdued pace as house price to earnings ratios begin to bite in many parts of the country and constrain price growth.”