Homeowners were today handed further reassurance the British property market is managing to avoid a crash, after the Nationwide building society said house prices rose by 1.4 per cent in January - the strongest monthly growth rate in more than a year and a half.

In its latest monthly survey of house price trends, the Nationwide said the January jump takes the annual rate of price growth to 4.4 per cent.

The mortgage lender, whose findings today echo recents surveys by the Halifax and property website Rightmove, said this is the highest monthly price growth since July 2004, when prices rose by 1.9 per cent and house price inflation was running at an annual 20 per cent.

Although it cautioned that the "fundamentals" of the market remain "fairly fragile", the Nationwide described the January price increase as "significant" and said it "confirms the strengthening trend we have seen since October".

The average house price in the UK now stands at £158,478 - up from £151,757 at the same point last year.

Fionnuala Earley, the Nationwide's group economist, said: "We think that at least part of the pick-up in the market since October reflects a release of some pent-up demand following the cut in interest rates in August and the increase confidence on the part of buyers and sellers as they became more comfortable that the market was heading for a soft landing.

"The continued pick-up in mortgage approvals [some 115,000 last November] suggests that the market will strengthen further over the next few months."

However, at the same time, Ms Earley added that it was "unlikely" the housing market would see a strong and sustained pick-up in property prices. She said that the economy remained likely to see "below-trend growth" this year, affordability among consumers was "stretched", and their appetite for taking on additional unsecured debt burdens was showing signs of diminishing.

Economists seized on the latest survey as providing further evidence that the Bank of England was unlikely to cut interest rates as early as next month, amid the suggestion that its August cut is beginning to have a marked effect.

George Buckley, an economist at Deutsche Bank, said a sharp rise in house price inflation "need not necessarily preclude future interest rate cuts".

But he added: "However, in the near-term we do believe that generally stronger household data will delay any further cut in interest rates.

"To be sure, movements in house price inflation will be important in determining the path of monetary policy going forward (after all, the BoE would almost surely not want to be responsible for stoking another house price boom).

"But our view of further interest rate cuts this cycle (towards the end of this year and start of next) is predicated on a further softening in the labour market, weak investment, expectations for slowing government consumption and a larger negative contribution of net exports to growth.

Howard Archer, the chief UK economist at Global Insight, suggested that the house price rise would increase the Bank of England's caution about rate cuts, adding: "We believe that upside for house prices will be limited by affordability constraints, elevated debt levels, muted earnings growth and a softer labour market.

"This expectation of limited price rises is reinforced by the recent evidence from the Halifax that first-time buyers are increasingly being squeezed out of the market."

The Bank reported that net mortgage lending for December stood at its highest level since June 2004. Morgage approvals reached highs not seen since May 2004. Net mortgage lending during December rose by £8.8 billion, beating the £8.5 billion forecast by analysts and the £7.6 billion six-month average. In November, net mortgage lending rose by £8.6 billion.

The number of approvals for house purchases, widely regarded as an indicator of future demand, stood at 122,000 in December, compared with a six-month average of 106,000. The total value of mortgage approvals, including remortgaging, rose by £29 billion, the highest level since November.