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UK House Prices Show Positive Momentum with Strongest Annual Growth in a Year

The UK housing market is seeing a positive shift, with house prices experiencing the most significant increase in a year, according to the latest data from Nationwide. 


In January, the average UK house price reached £257,656, showing a notable improvement with a 0.7% increase compared to the previous month. This marks a turnaround from December, which saw a decline of 1.8% in prices. 


Nationwide’s chief economist, Robert Gardner, expressed optimism, stating that while a rapid rebound may be unlikely, the outlook for the property market is “a little more positive.” This positive trend is attributed to encouraging signs for buyers, with mortgage rates continuing to trend downward. 


Investor sentiment has shifted towards optimism regarding future interest rates, with the belief that the Bank of England may lower rates in the years ahead. However, it is expected that the Bank will maintain its rate at 5.25% during the upcoming update. 


Verona Frankish, CEO of online estate agent Yopa, anticipates that steady interest rates will instill confidence in buyers, assuring them that mortgage affordability will remain stable throughout the purchasing process. 


Nationwide also highlighted data from the Royal Institute of Chartered Surveyors (Rics), indicating a halt in the decline of inquiries from new buyers. There are tentative signs that more homes are entering the market, providing a positive outlook for the industry. 


Despite these positive developments, Nationwide cautions that the path of interest rates in the coming months will be crucial. Affordability pressures persist, with a borrower earning the average UK income and making a home purchase with a 20% deposit facing a monthly mortgage payment equivalent to 38% of take-home pay—well above the long-term average of 30%. 


To bring affordability back in line with the historical average, mortgage rates would need to trend towards 3%. Currently, there is considerable variation in affordability across the country, with London, the South of England, and East Anglia facing more acute pressures. In contrast, Scotland and the North remain the most affordable regions. 


In London, first-time buyers’ average income is approximately 55% higher than the capital’s overall average income. This has led to an increasing number of first-time buyers relying on family, friends, or inheritance to fund their home purchases. In the fiscal year 2022-23, nearly half of first-time buyers received assistance in raising a deposit, a notable increase from 27% in the mid-1990s. 


Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.

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