0:03 AM, 3rd February 2025, About 2 hours ago
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The UK’s housing market saw a slowdown in price growth last month with an annual increase of 4.1%, a dip from December’s 4.7%, according to Nationwide.
It says that month-on-month, prices edged up 0.1% after seasonal adjustments.
Robert Gardner, Nationwide’s chief economist, said: “The housing market continues to show resilience despite ongoing affordability pressures. As we highlighted in our recent affordability report, while there has been a modest improvement over the last year, affordability remains stretched by historic standards.
He continued: “A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay – well above the long-run average of 30%.
“Therefore, it’s not surprising that a significant proportion of first-time buyers have to draw on help from friends and family to raise a deposit.
“Despite these challenges, there has been relatively little change in overall levels of home ownership in recent years.”
Nationwide says that the proportion of households in the private rented sector remained stable at 19%.
Nathan Emerson, the chief executive of Propertymark, said: “Moving into 2025, it’s positive to see that house prices and mortgage lending remain resilient despite continued affordability pressures.
“Currently, it’s likely a lot of movement in the market is due to people wanting to push through with their purchases and sales before the Stamp Duty rises in England and Northern Ireland in April.
“However, one aspect helping maintain momentum in the marketplace is the fact that mortgage rates and financial pressures are slowly improving for those looking to make a move.”
Iain McKenzie, the chief executive of The Guild of Property Professionals, said: “A year-on-year comparison will favour 2025 over 2024, with the market starting on a more positive footing so far.
“An increase in the number of homes for sale has provided buyers with more choice, and the increased number of new buyers into the market has led to heightened activity.
“Momentum built up towards the end of last year has carried over into 2025, with market activity bolstered by a rush to complete transactions ahead of the impending Stamp Duty changes in April.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “House prices crept up in January. It wasn’t exactly a stellar start to the year, especially compared to the powerful growth we saw in December.
“However, prices are still under pressure from buyers trying to clamber through the stamp duty holiday window, before it slams shut at the end of March.
“The property market risks becoming a victim of its own success, with prices near a record high.”
She adds: “Nationwide said the house price to earnings ratio hit 5.0 at the end of 2024, which is well above the long run average of 3.9.
“When you add in the fact that the average two-year fixed rate mortgage stuck stubbornly around the 5.52% mark this week (Moneyfacts), potential buyers will be horribly stretched.”
Tom Bill, the head of UK residential research at Knight Frank, said: “Higher borrowing costs are weighing on buyers, but demand still feels artificially strong.
“Sub-4% mortgage offers that pre-date the Budget and an April rise in stamp duty means demand in the first quarter of the year is likely to be more robust than in the second.
“Until rate cut expectations improve and mortgages starting with a 3 re-appear, we expect further downwards pressure on house prices.”
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