Nationwide’s latest figures show a monthly rise in property prices of just 0.1% for January this year. That’s lower than previously predicted and an indicator that the cost of living and higher mortgage interest rates are still impacting would-be buyers.
Despite this, the figure is still 4.1% higher than house prices a year ago. It brings the cost of the average UK property to £268,213, according to the mortgage lender. Nationwide predict prices to rise by between 2% and 4% this year.
Only last week, data from online property portal Zoopla showed that January 2025 was already faring better than January 2024 and 2023. Demand was up 13% and 10% more properties were available for sale.
Quarter percentage cut expected to loosen mortgage rates
In terms of mortgage interest rates, analysts a predicting a quarter percent cut in the Bank of England base rate this Thursday. That would bring the figure to 4.5%. A total of three interest rates cuts are expected by the end of the year, so that affordability should improve for many house buyers. Certainly, current mortgage interest rates are nowhere near the 6.22% they reached in the summer of 2023, yet the 1.1% of summer 2021 remains a distant dream for many.
The market is currently experiencing a surge in sales, thanks to the rush to beat the Stamp Duty changes on April 1. Then, buyers will have to pay Duty on properties which are less expensive than at present. Meanwhile, property costs are historically high compared to earnings. The current property-wages ratio is 5.0 whereas typically the average is 3.9.
Fewer home owners amongst younger demographics
Figures from the latest English Housing Survey by the Ministry of Housing, Communities and Local Government (MHCLG), showed around 65% of homes were privately owned last year. Of those though, there was a significant drop in ownership between those aged 25 to 34 and 35 to 44, compared to two decades ago.