House prices rise more than expected in January
By Michele Maatouk
Date: Wednesday 31 Jan 2024
(Sharecast News) - UK house prices rose more than expected in January as mortgage rates trended lower, according to figures released on Wednesday by Nationwide.
House prices were up 0.7% on the month, having been flat in December and versus expectations for a 0.1% jump. The average price of a home now stands at £257,656.
On the year, prices were down just 0.2% in January following a 1.8% decline the month before. This marked the strongest outturn since January 2023.
Nationwide chief economist Robert Gardner said: "There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down. This follows a shift in view amongst investors around the future path of Bank Rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.
"These shifts are important as this led to a decline in the longer-term interest rates (swap rates) that underpin mortgage pricing around the turn of the year. However, the partial reversal in recent weeks in response to stronger than expected inflation and activity data cautions that the interest rate outlook remains highly uncertain.
"While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive. The most recent RICS survey suggests the decline in new buyer enquiries has halted, while there are tentative signs of a pickup in the number of properties coming onto the market."
Andrew Wishart, senior economist at Capital Economics, said the larger-than-expected monthly gain in house prices reflected improving public sentiment about the economy and the housing market, and supports CE's above-consensus forecast that house prices will rise by 3% this year.
"While the cost of the mortgage needed to buy the average home remains high by historical standards, the rise in house prices at the start of the year shows that declines in mortgage rates have been sufficient for house prices to eke out further gains," he said.
"Alongside improving public sentiment about the outlook for house prices according to YouGov, we are content with our above-consensus forecast that they will rise by 3% this year, reversing the 2.4% fall in 2023."
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