"Looking ahead, economic developments will remain the key driver of housing market trends and house prices."
Prior to December, annual growth had been below 1% for twelve 12 successive months.
House prices saw a monthly rise of 0.5% after taking account of seasonal factors.
Robert Gardner, Nationwide's chief economist, said: “Indicators of UK economic activity were fairly volatile for much of 2019, but the underlying pace of growth slowed through the year as a result of weaker global growth and an intensification of Brexit uncertainty.
“Recent data continue to paint a mixed picture. Economic growth appeared to grind to a halt as 2019 drew to a close, though business surveys point to a pickup at the start of the New Year. Labour market data was surprisingly upbeat in the three months to November, with the economy adding over 200,000 jobs - the largest gain since the end of 2018.
“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.
“Looking ahead, economic developments will remain the key driver of housing market trends and house prices. Much will continue to depend on how quickly uncertainty about the UK’s future trading relationships lifts, as well as the outlook for global growth. Overall, we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months."
Jonathan Samuels, CEO of Octane Capital, commented: "Confidence may have improved significantly since the General Election result but trade negotiations are only now starting and the economic fundamentals remain febrile.
"While price growth looks set to gain momentum in the Spring, as a significant amount of pent-up demand comes through in a more stable political climate, the market is unlikely to go mad.
"We are not out of the woods yet and so it's essential that values don't suddenly get ahead of themselves.
“The property market has started 2020 on a sober rather than swashbuckling note, which is for the best if price growth is to be sustainable."
Gareth Lewis, commercial director at MT Finance, added: "January can be a tricky month for the housing market as people return from their Christmas breaks and ease themselves back into work before deciding to put their homes up for sale. It is never going to be a rocket month for transactions but a steady increase in prices, and the second biggest monthly growth in two years, is very positive.
"The market is being propped up by improved affordability and low unemployment. The Nationwide commentary reflects what we are hearing from estate agents - that buyers and sellers are starting to show more interest in moving, including cash buyers securing investment properties."
