Nationwide’s latest figures show a 0.7% rise in UK house prices this January, a trend that is being closely watched ahead of the Bank of England’s imminent interest rate decision. This increase marks a notable improvement in the annual rate of house price growth, which has gone from -1.8% in December to -0.2% in January, the best performance since January 2023.
Robert Gardner, Nationwide’s Chief Economist, notes some positive developments for potential buyers, especially with mortgage rates on the decline. He says, “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. While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.” However, he adds that the evolution of mortgage rates will be crucial, as affordability pressures were a significant factor affecting housing market activity in 2023.
By the end of 2023, the monthly mortgage payment for a typical first-time buyer property, based on an average UK income and a 20% deposit, was 38% of take-home pay, significantly higher than the long-term average of 30%.
Jason Tebb, President of OnTheMarket, observes a strong start to the year for the housing market, with falling mortgage rates boosting buyer and seller activity. Marc von Grundherr, Director of Benham and Reeves, also highlights the burgeoning buyer demand and the impact of declining mortgage rates in 2024.
Tom Bill, head of UK residential research at Knight Frank, predicts a bottoming out of UK house price declines, with an expected 3% rise in house prices this year. Matt Thompson of Chestertons and Anthony Codling of RBC Capital Markets anticipate modest increases in house prices throughout 2024.
Emma Cox, MD of real estate at Shawbrook, remarks on a slight dip in residential property transactions for December as a minor setback in an otherwise positive year start. Zoopla’s latest house price index indicates a 13% surge in agreed sales, signalling renewed confidence.
Jason Harris-Cohen, CEO of Open Property Group, comments on the resilient property market, with prices nearing last year’s levels. “This growth is being driven by an increasing level of buyer confidence, with property prices proving ever resilient, despite a wider landscape of macro uncertainty and interest rates remaining at their highest in over 15 years.” He anticipates further confidence growth if the Bank of England maintains current rates.