Property industry experts welcome January rise in house prices

A wave of optimism swept across the housing market this morning ahead of tomorrow’s Bank of England interest rate decision after Nationwide reported UK house prices rose 0.7% in January.

And the small rise led to in an improvement in the annual rate of house price growth from -1.8% in December to -0.2% in January – the strongest outturn since January 2023.

Taking to X (formerly Twitter) TV pundit and property expert Russell Quirk said: “The grim reaper doom-mongers are going to have to work hard to manipulate these positive numbers into a negative today!”

ENCOURAGING SIGNS

Robert Gardner, Nationwide‘s Chief Economist, says: “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.

“While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”

But he adds: “How mortgage rates evolve will be crucial, as affordability pressures were the key factor holding back housing market activity in 2023.”

At the end of 2023, a borrower earning the average UK income and buying a typical first-time buyer property with a 20% deposit had a monthly mortgage payment equivalent to 38% of take-home pay – well above the long run average of 30%.

Gardner says: “If average mortgage rates were to trend down to 4%, this would ease the mortgage payments burden to 34% of take-home pay (assuming house prices and earnings are unchanged).

“However, other things equal, mortgage rates of 3% (still well above the lows seen in the wake of the pandemic) would be needed to bring this measure of affordability back towards its long run average.”

STRONG START

Jason Tebb, President of OnTheMarket, says: “The housing market has got off to a strong start this year with consistently falling mortgage rates encouraging buyers and sellers to take action.”

And Marc von Grundherr, Director of Benham and Reeves, adds: “Those who were quick out of the blocks at the start of the year with yet more predictions of a property market demise are already reaching for a flannel to wipe the egg off of their faces.

“We’ve seen a coiled spring of buyer demand developing in recent months and with mortgage rates having fallen in 2024, this is now starting to unwind as buyers look to make hay while the sun is shining.”

Verona Frankish, Chief Executive of Yopa, says: “The property market has started the year where it left off in 2023 – very much on the front foot.

“We’re seeing buyers return with confidence, spurred on by a reduction in mortgage rates, and there has also been an increase in for sale stock reaching the market as sellers look to ride this wave of improving market sentiment.”

BARGAINS TO BE HAD

Iain McKenzie, Chief Executive of The Guild of Property Professionals, adds: “Despite the surprising uptick in inflation in December, buyers appear to believe there are bargains to be had, and are returning to the market faster than expected.

“Tomorrow’s Bank of England base rate announcement will be pivotal for those who have delayed their decision.

 “But with inflation expected to continue falling, many are optimistic we’ve reached the peak of the rate-rise cycle – potentially prompting further cuts to the base rate.

 “This is likely to motivate lenders to continue reducing mortgage rates, enhancing accessibility to homeownership, particularly for first-time buyers eager to enter the property market.”

BOTTOMING OUT

Tom Bill, head of UK residential research at Knight Frank, says: “UK house price declines are bottoming out as the economic news improves. Inflation has fallen faster than predicted, which means financial markets believe rates will drop by a full percentage point in 2024.

“Mortgage approvals are creeping up and we expect UK house prices to rise by 3% this year. A general election later rather than sooner would allow more momentum to build.”

And Matt Thompson, head of sales at Chestertons, says: “The gradual introduction of more attractive mortgage products boosted buyer confidence in January, resulting in more buyers entering the market.”

And Anthony Codling, Managing Director of equity research at RBC Capital Markets and non-executive director of Twindig, adds: “We do not expect a return to the rates of house price inflation seen during 2020, 2021 and 2022, but the foundations under house prices are firming, and we expect to see modest rises rather than falls during 2024.”

ABSOLUTE BELTER

Jake Stott, Founder at Manchester-based Mondo Mortgages, told Newspage: “January has been an absolute belter for the housing market. The Nationwide House Price Index for January highlights the optimism that is emerging after a turbulent 2023.

“Since lenders decided to slash rates right from the start of the month, we’ve seen first-time buyers popping up like daffodils in spring.”

He adds: “They’re not just window-shopping now but are serious, with a mortgage in principle clutched in their eager hands and ready to haggle. “Confidence is sky-high.

“Even those houses that have been languishing on the market are finally getting a second glance. Buyers are swooping in, backing themselves to secure a discount off the asking price. If January’s anything to go by, the property market is in for a corker of a year.”