House price growth slows despite ‘busier January than normal’
House price growth slowed slightly in January, but year-on-year growth remained robust despite higher interest rates.
The annual rate of house price growth slowed to 4.1 per cent in January, compared with 4.7 per cent in December, according to the Nationwide House Price Index.
House prices increased by 0.1 per cent month on month, after taking account of seasonal effects.
“The first half of the month was a bit slow but it has turned out to be a busier January than normal,” Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said.
“The stamp duty holiday has helped, with an increase in sales agreed in those chains where there is a first-time buyer keen to take advantage of the discount before the end of March.”
From April 1, first-time buyers will have to pay the same stamp duty as everyone else.
“The value of a stamp duty incentive to first-time buyers is instant – it is real cash in their pockets, allowing someone to buy who otherwise might not be able to and this impacts those trying to move because they need a first-time buyer at the bottom of the chain in order for the second stepper to move on,” Reynolds said.
Affordability pressures continue
Robert Gardner, Nationwide’s Chief Economist, said the housing market continues to “show resilience despite ongoing affordability pressures.”
A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20 per cent deposit would have a monthly mortgage payment equivalent to 36 per cent of their take-home pay – well above the long-run average of 30 per cent, Gardner explained.
House prices also remain high relative to average earnings, which Gardner said was a “challenge made worse by the record increase in rents in recent years”, which with the cost-of-living crisis has “hampered the ability of many in the private rented sector to save”.
Despite this, the latest English Housing Survey produced by the Ministry of Housing, Communities & Local Government (MHCLG) showed homeownership rate remained stable in 2024 at 65 per cent.
However, chief executive of mortgage broker SPF Private Clients Mark Harris said the outlook for borrowers is “looking up”, with interest rate cuts on the horizon expected to lead to lower mortgages.
“With some forecasters expecting a handful of rate reductions this year, it is encouraging news for those thinking of buying a property or refinancing,” Harris said.