• Swindon & Wiltshire Property
• Thursday February 1 2024
• Author Name: Peter Davison

House prices climb again with the biggest rise in a year – Nationwide

House prices have started to climb again, with the biggest monthly rise in a year being recorded according to Swindon-headquartered building society Nationwide.

The lender’s index found the average house price had increased by 0.7 per cent in January compared to the previous month.

It was a significant turnaround from the December figures, which showed a 1.8 per cent decline in prices.

The average UK house price was £257,656 in January – down 0.2 per cent on a year earlier.

Affordability remains a concern

Affordability, though, remains a real concern for buyers. The lender said a borrower earning the average UK income and buying a typical first-time buyer property with a 20 per cent deposit had a monthly mortgage payment equivalent to 38 per cent of take-home pay – well above the long-run average of 30 per cent.

A 20 per cent deposit represents around 105 per cent of average annual gross income. “This reflects that house prices are still very high relative to earnings, with the house price to earnings ratio standing at 5.2 at the end of 2023, well above the long-run average of 3.9,” said the building society.

Nationwide’s chief economist, Robert Gardner, said: “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, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.

“These shifts are important as this led to a decline in the longer-term interest rates (swap rates) that underpin mortgage pricing around the turn of the year.

“However, the partial reversal in recent weeks in response to stronger than expected inflation and activity data cautions that the interest rate outlook remains highly uncertain.”

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