Growth in UK house prices eases in January - Nationwide
By Michele Maatouk
Date: Friday 31 Jan 2025
(Sharecast News) - Growth in UK house prices eased in January, according to figures released on Friday by Nationwide.
House prices ticked up 0.1% on the month in January following a 0.7% increase in December 2024, missing expectations for 0.3% growth.
On the year, house prices rose 4.1% in January following a 4.7% jump the month before.
The average price of a home was £268,213, down from £269,426.
Nationwide chief economist Robert Gardner said: "The housing market continues to show resilience despite ongoing affordability pressures. As we highlighted in our recent affordability report, while there has been a modest improvement over the last year, affordability remains stretched by historic standards.
"A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay - well above the long-run average of 30%.
"Furthermore, house prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9. Consequently, the deposit hurdle remains high.
"This is a challenge that has been made worse by the record increase in rents in recent years, which, together with the cost-of-living crisis more generally, has hampered the ability of many in the private rented sector to save."
Alex Kerr, UK economist at Capital Economics, said: "Although the muted 0.1% m/m rise in Nationwide house prices in January was slightly worse than expected (consensus +0.3% m/m, CE forecast +0.2% m/m), it is not too surprising given the rise in quoted mortgage rates at the end of last year. But we doubt that price growth will continue to disappoint and instead think prices will rise by more than most expect this year.
"Looking ahead, house price growth may remain muted over the next few months given that swap rates point to mortgage rates climbing higher. That said, prices may be supported by a potential surge in demand ahead of the expiry of the temporary increase to the stamp duty nil band thresholds after 31st March.
"Either way, our forecast that Bank Rate will be cut from 4.75% now to 3.50% in early 2026, rather than the low of 4.00% that investors currently anticipate, suggests mortgage rates will fall from 4.6% in December to around 4.0% in 2026. That explains our view that house prices will grow by an above-consensus 3.5% in Q4 2025 and 4.5% in Q4 2026."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN