United Kingdom: House prices continue to rise in January
According to the Nationwide Building Society (NBS), house prices in the United Kingdom rose 0.6% in January compared to the previous month in seasonally adjusted terms, matching December’s figure. On an annual basis, house prices rose 3.2% in January, markedly overshooting analysts’ expectations and up from December’s 2.6%. The average house price in January was GBP 211,756 (January 2017: GBP 205,240).
The stronger annual figure comes as a surprise given subdued mortgage approval rates in recent months; they declined to a three-year low in December. In addition, households’ purchasing power remains under pressure, as evidenced by soggy retail sales in Q4 and feeble consumer confidence. However, new properties continue to reach the market in dribs and drabs, which is providing support to prices.
Looking ahead, house price growth is likely to moderate this year, reflecting a further economic slowdown and pressure on household budgets. However, low mortgage rates by historical standards, a solid labor market and tight housing supply should continue to prop up prices.