Average house prices grew by 0.6% last month according to the latest Nationwide house price index, leading to an “unexpected pickup” in annual price growth.
The average property is now worth £211,756, with annual growth increasing from 2.6% in December to 3.2% in January.
Robert Gardner, chief economist at Nationwide, said the rise was “a little surprising”, particularly given mortgage approvals dropped to 61,000 in December, the lowest level in three years and that household finances remain squeezed.
He added: “Activity has been subdued on both the demand and supply side of the market. The flow of properties coming onto estate agents’ books has been more of trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house prices.”
Gardner added that while the ongoing squeeze on household budgets and subdued economic activity will impede house price growth, the effect is likely to only be modest.
Jonathan Hopper, managing director of Garrington Property Finders, suggested that increasing numbers of would-be homeowners who had been sitting on the fence are concluding that now is the time to strike, pointing out that last month his firm saw a flurry of activity and deals being done.
He continued: “With buyers at all price points deeply wary of overpaying, it’s encouraging to see many of the first listings of the new year come onto the market at realistic price points. A dose of reality among sellers who want to move swiftly rather than wait months for a sale is just what the market needs to begin the new year on the right foot.”
Craig Hall, new build manager at Legal & General Mortgage Club, said that the housing market is in a “healthier position than we have seen in previous years” with house prices growing at a much more sustainable rate.
Article published by Whatmorgage - 1st February 2018