House prices continue to soar ahead
(Picture: PA)UK house prices have enjoyed their strongest start to the year since 2005, according to new data.
Nationwide’s long-running house price index suggests average selling prices rose by 0.8% in January, meaning prices are now 11.2% above where they stood a year earlier. That was above forecasts of a 10.9% rise.
Robert Gardner, Nationwide‘s Chief Economist, said is was “the strongest pace since June last year, and the best start to the year for 17 years.” The average house price now stands at £255,556, up from £254,822 in December.
Gardner said: “Housing demand has remained robust. Mortgage approvals for house purchase have continued to run slightly above pre-pandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.
“Indeed, the total number of property transactions in 2021 was the highest since 2007 and around 25% higher than in 2019, before the pandemic struck.
“At the same time, the stock of homes on estate agents’ books has remained extremely low, which is contributing to the continued robust pace of house price growth.”
Jonathan Hopper, CEO of Garrington Property Finders, said: “January is traditionally a strong month, as many people begin the New Year with ‘move home’ at the top of their Resolutions list. But last month was a barnstormer as the pandemic-inspired Great Relocation showed no signs of abating.”
The performance defies predictions that the housing market would start to slow in 2022. Gardner said Nationwide was still expecting price rises to cool as the Bank of England continues to raise rates. The central bank is expected to announce its first back-to-back rate rise since 2004 this week and interest rates could reach as high as 1% by summer.
Gardner said: “This will further reduce housing affordability if it feeds through to higher mortgage rates, although to date a significant proportion of the rise in longer term interest rates seen in recent months has been absorbed by lenders.”
Lucy Pendleton, of estate agents James Pendleton, said: “Weakening affordability remains the elephant in the room, with deposits requiring a higher chunk of annual pay than ever before. Add this to the soaring living costs, low stock availability and the prospect of more interest rate rises, and you can expect things to cool down.”
