The latest figures show the annual rate of house price growth slowed from 4.7% to 4.1% in January.
Nationwide’s House Price Index have today, Friday 31st January, published new research which shows the increase of house prices remains slow.
Researchers found that prices are 4.1% higher than this time last year and 0.1% higher than last month. Although prices aren’t increasing as much as experts hoped, they have remained in the green despite ongoing affordability pressures.
On the topic of financial strains, the leisurely increase in house prices have left buyers stretched.
‘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%,’ said Robert Gardener, Nationwide’s chief economist.
Although the picture currently looks bleak, experts theorise this will change as we move through 2025. House prices are expected to skyrocket as buyers rushing to beat the stamp duty deadline on 31st March, which will see tax rates drop from £250,000 to £125,000, or from £425,000 to £300,000 for first-time buyers.
Alice Haine, personal finance analyst at Bentinvest, said: ‘Another motivating factor could come next week if the Bank of England delivers a third rate cut, a move likely to give slightly improving affordability levels another boost.
‘The combination of easing inflation, robust wage growth and cuts in borrowing costs can support buyers in their quest to secure the home they want, though affordability levels remain stretched by historical standards.
‘Add in the prospect of more support from the government if proposals to loosen lending rules go ahead and the outlook for first-time buyers and those looking to refinance or upsize may certainly be improving.’
The figures have been published after the government wrote to housing regulators in December asking them for ideas on how to boost UK growth – a subject that has been on everyone’s mind this week following the chancellor’s speech.
Daniel Austin, CEO and co-founder at ASK Partners, added: ‘We are continuing to see a rise in house prices, which is hopefully the sign of an upward trend developing going into 2025. The market certainly appears to be showing signs of resilience. We expect to see an active period for the market as buyers look to get ahead of changes in stamp duty thresholds from April that will have an adverse effect on affordability.’
‘In the property investment world, rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. The exodus of buy-to-let mortgage holders following last year’s Budget had caused prices to rise in the UK rental market due to a lack of supply,’ Daniel continued. ‘We have already seen a rise in mortgage approval rates back to levels previously seen before the 2022 mini-Budget. The impact on the rental market should entice developers of schemes such as co-living and build-to-rent to fulfil the lack of supply.’
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