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House prices grow more than expected in January - Nationwide

By Michele Maatouk

Date: Wednesday 29 Jan 2020

House prices grow more than expected in January - Nationwide

(Sharecast News) - House prices grew more than expected in January, according to the latest survey from Nationwide, hitting a 14-month high.
Prices rose 1.9% on the year following a 1.4% increase in December, beating expectations of a 1.5% jump. This follows 12 consecutive months in which annual price growth had been below 1%.

On the month, prices were up 0.5% in January compared to a 0.1% rise the month before and expectations of 0.3% growth.

Nationwide chief economist Robert Gardner said: "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."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said this was another positive housing market signal.

"The run of upbeat housing market data continues. Three-month-on-three-month growth in Nationwide's house price index picked up to 0.8% in January - its highest rate since March 2018 - from 0.5% in December. Nationwide's data are based on the lenders' mortgage offers and so likely do not fully reflect the boost to prices from the general election result, given that it usually takes around three weeks to secure a mortgage.

"Indicators of demand at the very start of the home-buying process are red hot. The new buyer enquiries balance of the RICS Residential Market Survey leaped in December to its highest level since January 2016. In addition, enquiries to estate agents in the month after the election were up 15% year-over-year in January, according to Rightmove, while asking prices posted the biggest month-to-month January gain since records begin in the early 2000s.

"We think the pick-up in demand can be sustained this year by the continuation of low mortgage rates and solid wage growth, driving prices up by about 4%."

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