House prices jump by 0.5% in January
House prices climbed by 0.5% in January, adding an additional £615 to the cost of the average home, according to a new Nationwide survey.
In its first full month's report since the General Election, Britain's biggest building society said cheap mortgages and a 'healthy labour market' helped boost Britain's housing market in January.
In the year to January, average property prices rose by 1.9 per cent, marking a 14-month high for house price inflation, the Daily Mail reports.
Buyers can now expect to fork out around £215,897 for a home, but Nationwide poured cold water on talk of a sizeable Boris bounce for the housing market and forecast a 'broadly flat' year ahead for property values.
Nationwide highlighted that last week's English Housing Survey showed home ownership levels have also risen in the last year, to 63.8 per cent. And while the majority who own a home are 65 or over, the number of first-time buyers is on the up.
This month's uptick in house prices follows December's annual property inflation figure of 1.4 per cent. That came at the end of an entire year during 2019 when annual property inflation was stuck below 1 per cent on the index.
To put the current growth rate into context, back in April 2017 the rate of house price growth was around 4.5 per cent.
Since last month's election, many estate agents, mortgage brokers and commentators within the housing sector have been calling a 'Boris bounce', others remain more circumspect and predict a more modest increase in activity and another subdued year for house prices.
Robert Gardner, Nationwide's chief economist, said: 'Looking ahead, economic developments will remain the key driver of housing market trends and house prices.
'Much will continue to depend on how quickly uncertainty about the UK’s future trading relationships lifts, as well as the outlook for global growth.
'Overall, we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months.'
Howard Archer, chief economic adviser at EY Item Club said that while the housing market was likely to get a 'near-term boost from reduced uncertainties', the 'upside may well be limited.'
Mr Archer added: 'Nevertheless, we have modestly raised our forecast for house price gains over 2020 to 2.8 per cent from 2 per cent and there is clearly a possibility that they could rise more than this.'
The New Year has seen the traditional pick-up in enquiries from potential buyers and sellers, but reports from property listing sites Rightmove and Zoopla showed this as being stronger than usual.
Commenting on Nationwide's data, Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ‘These figures confirm what we are seeing in our offices as there has been more buyer and seller optimism around since even just before the election.
'But the real test for the market will come in February and March when we will see if that interest translates into higher transaction levels.
‘Prices are likely to continue to be underpinned by a shortage of supply and relatively low levels of house building, while ongoing difficulties trying to raise deposits - evidenced by the struggles still facing first-time buyers - will keep demand in check.'
On Thursday, Bank of England policymakers will vote on whether or not to move interest rates from 0.75 per cent.
If interest rates are cut, borrowers could find themselves able to snap up even cheaper mortgages, while savers will, once again, be left in the doldrums.
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