UK Property Market Update

The UK housing market is showing signs of improvement, with the strongest price increase in a year, as reported by Nationwide.

January saw a 0.7% rise in average house prices, a notable recovery from the previous month's 1.8% decline.

The average price stood at £257,656, slightly lower than the previous year by 0.2%. Nationwide's chief economist, Robert Gardner, views the market's outlook as somewhat brighter, though a swift surge in activity or prices in 2024 seems unlikely.

This positive shift is attributed to declining mortgage rates and growing investor optimism about future interest rate reductions by the Bank of England.

Despite expectations of stable interest rates by both the Bank of England and the US Federal Reserve, the market is believed to benefit from this stability.

The steady rates are anticipated to bolster buyer confidence by ensuring consistent mortgage affordability.

Additionally, data from the Royal Institute of Chartered Surveyors (RICS) indicates a stabilization in new buyer inquiries and a potential increase in property listings.

Nationwide warns, however, that future interest rate trends will be crucial, given the ongoing affordability challenges that restrict market activity.

For affordability to improve significantly, mortgage rates would need to approach 3%.

The report also highlights regional disparities in affordability, with particular strain in London, the South of England, and East Anglia, whereas Scotland and the North remain more accessible.

The rising cost of entering the housing market in London has led many first-time buyers to seek financial assistance from family, friends, or inheritance, a trend that has notably increased since the mid-1990s