Nationwide said house prices in January rose by 0.7% from the month before after being flat in December
British house prices rose this month more than economists had expected, adding to signs that the squeeze from high interest rates is beginning to ease, figures from Nationwide Building Society showed on Wednesday.
Nationwide said house prices in January rose by 0.7% from the month before, after being flat in December.
There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down. This follows a shift in view amongst investors around the future path of Bank Rate, Nationwide chief economist Robert Gardner said.
Prices this month were 0.2% lower than a year earlier – the smallest annual drop since January 2023 – after forecasts for a 0.9% drop and a 1.8% decline in December.
Looking at the three months to the end of January, prices increased by 1.1%, their fastest since July 2022, which was shortly before rising BoE interest rates and temporary bond market turmoil under PM Liz Truss hit the market.
The Bank of England (BoE) is expected to keep its Bank Rate at 5.25% on Thursday, but may lower some of its inflation forecasts, which economists think will give it scope to start to reduce interest rates from the middle of 2024.
The Bank of England said on Tuesday that average mortgage rates dropped in December for the first time since November 2021. The number of mortgages approved by lenders was the highest since June, but still around 25% below pre-pandemic levels.
Nationwide’s data adds to evidence that mortgage rates already have dropped far enough to arrest the downtrend in house prices, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said.