The UK housing market had its strongest start in January for nearly two decades, industry data showed on Tuesday, as supply failed to keep up with “strong” demand.
as per latest Nationwide House Price IndexAnnual house price growth rose to 11.2% in January, compared to 10.4 percent in December. The above consensus increase was the highest since June 2021, and marked the strongest start to the year for 17 years. Analysts were expecting growth of closer to 10.9%.
Month-on-month, prices rose 0.8%, the sixth consecutive monthly increase that was once attributed to seasonal effects. This was down from December’s growth of 1.1% but ahead of forecasts; Most analysts were expecting growth of around 0.6%.
The average price of a property is now £255,556 compared to £254,822 a month ago.
The nationwide growth was attributed to strong demand and limited supply.
Robert Gardner, Nationwide Chief Economist, said: “Housing demand remains strong. Mortgage approvals for home purchases are running slightly above pre-pandemic levels, despite an increase in activity in 2021 as a result of the stamp duty holiday , which encouraged buyers to carry forward their transactions to avoid additional tax.
“At the same time, the stock of homes on property agents’ books has remained extremely low, contributing to the continued pace of increase in home prices.”
The housing market has boomed since the first lockdown as people reevaluated their property needs and availed the stamp duty holiday before it expires at the end of September 2021. However, this year the market is expected to cool down in the form of record inflation, high interest. The burden of increasing rates and cost of living is enormous.
Gardner noted: “While the outlook remains uncertain, it is likely that the housing market will slow this year. House price growth since the pandemic has outpaced earnings growth by a wide margin and, as a result, housing capacity.” has become less favorable.
“Low affordability is likely to have a dire impact on market activity and the rise in home prices, especially since household finances are also coming under pressure from a sharp rise in cost of living.”
Gabriella Dickens, senior UK economist Pantheon Macroeconomicssaid: “Home prices hit a seven-month high at the end of the year, as buyers shrugged off the uncertainty relationship with Omicron and increased CPI inflation.
“However, there are early signs that home price growth is now slowing down. Google Trends data, for example, suggests that the number of people searching for the phrase ‘homes for sale’ is roughly its pre-Covid level, which is higher than it buys up to 60% in March 2021.
“All told, we think home price growth will fail to maintain its recent momentum, with month-on-month gains of only 0.2% in the first half of this year.”