- Nationwide said the average UK house price rose 0.6% to £211,756 over January.
- Annual price growth was up to 3.2% from 2.6% in December 2017.
- Nationwide’s chief economist said the acceleration in prices was “a little surprising”
- Economist Samuel Tombs said the data “is hard to reconcile with virtually all other timely indicators.”
LONDON – UK house prices ticked up in January according to mortgage lender Nationwide, but analysts warned the apparent momentum cannot last.
Nationwide said the average house price unexpectedly rose 0.6% to £211,756 over January, bringing annual price growth up to 3.2% from 2.6% in December 2017.
Nationwide’s chief economist Robert Gardner said the acceleration in prices was “a little surprising” given signs of softening in the sector in recent months, and given that the housing market appeared to be softening over 2017 as Brexit-related inflation began to bite.
“Retail sales were relatively soft over the Christmas period, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll,” he said.
Monthly house price data is often volatile, and it may well be that January’s surprise uptick represents an anomaly rather than a trend.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said Nationwide’s measure “is hard to reconcile with virtually all other timely indicators.”
Online portal Rightmove said asking prices rose a mere 1.1% in January. In addition, a net balance of -6 surveyors in December expected house prices to rise over the next three months, according to RICS. Mortgage approvals also fell to their lowest level since January 2015.
“With real wages on course to increase only modestly this year and mortgage rates set to remain on a rising path, we doubt that house prices can continue to climb this year,” said Tombs in an emailed note.
Mainstream forecasters expect house prices in the UK to rise between 1% and 4% in 2018.
“Squeezed incomes and Brexit-related uncertainty”
Jonathan Samuels, chief executive of property lender Octane Capital, said prices continue to grow due to a lack of homes for sale and low interest rates.
“The rebound in annual price growth is less about demand strength than supply weakness,” he said.
“Against a backdrop of squeezed incomes and Brexit-related uncertainty, demand is understandably subdued, but prices are being supported by the sheer lack of homes for sale and the low cost of borrowing.
“2018 looks set to deliver a year of low single-digit growth. Many households are likely to sit tight for another year, or at least until there is more clarity on the outcome of Brexit negotiations.”
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