Annual house price growth increased to 11.2% in January, from 10.4% in December, according to the figures from Nationwide
The latest Nationwide house price index, released yesterday morning, reveals that January has seen the strongest start to the year since 2005.
According to the figures, annual house price growth increased to 11.2% in January, from 10.4% in December. Prices are also up 0.8% month-on-month.
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, says: Housing demand has remained robust. Mortgage approvals for house purchases 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, he said.
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, he said.
Marc von Grundherr, director of Benham and Reeves, comments: Make no mistake, the housing market is booming, and we’ve picked right back up from where we left off in 2021, with the strongest start to the year in almost two decades.
It’s hard to remember a time when such bullish market conditions were maintained for such a long period of time. However, with inflation starting to put pressure on household finances there is a chance we may soon see this relentless rate of house price appreciation start to slow, he said.
Founder and chief executive officer of GetAgent, Colby Short, explains: Since the introduction of the stamp duty holiday we’ve seen the nation’s homebuyers beg, borrow and borrow some more in order to secure a purchase and make a saving. However, now this saving is no longer on the cards, we’re yet to see this heightened market activity subside and house prices continue to accelerate as a result.
While the outlook remains uncertain, Gardner predicts the housing market will slow this year. This is because house price growth has outstripped earnings growth by a wide margin since the pandemic struck and housing affordability has become less favourable as a result.
Gardner explains: For example, a 10% deposit on a typical first-time buyer home is now equivalent to 56% of total gross annual earnings, a record high. Similarly, a typical mortgage payment as a share of take-home pay is now above the long-run average, despite mortgage rates remaining close to all-time lows.
