UK Property Industry experts welcome January rise in UK house prices of 0.7%

A surge of positivity swept through the property market today, anticipating tomorrow's Bank of England interest rate decision, following Nationwide's announcement of a 0.7% rise in UK house prices for January.

This modest increase contributed to a noteworthy improvement in the annual rate of house price growth, shifting from -1.8% in December to -0.2% in January – marking the strongest performance since January 2023.

Russell Quirk, a property expert, expressed optimism on X (formerly Twitter) TV, stating, “The grim reaper doom-mongers are going to have to work hard to manipulate these positive numbers into a negative today!”

Nationwide's Chief Economist, Robert Gardner, attributed this optimistic outlook to encouraging signs for potential buyers. Mortgage rates have continued to decline, reflecting a shift in investor sentiment towards a more optimistic view of the Bank of England lowering rates in the future.

Gardner commented, “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.” However, he emphasized that the evolution of mortgage rates would be crucial, considering affordability pressures as a key factor that restrained housing market activity in 2023.

At the close of 2023, borrowers with the average UK income faced a monthly mortgage payment equivalent to 38% of take-home pay. Gardner explained, “If average mortgage rates were to trend down to 4%, this would ease the mortgage payments burden to 34% of take-home pay."

Industry experts have echoed the positive sentiment, with Jason Tebb, President of OnTheMarket, noting a strong start to the year and consistently falling mortgage rates encouraging action from buyers and sellers.

Despite unexpected upticks in inflation in December, Iain McKenzie, Chief Executive of The Guild of Property Professionals, highlighted the return of buyers and expressed optimism about a potential peak in the rate-rise cycle.

Tom Bill, head of UK residential research at Knight Frank, expects UK house prices to rise by 3% this year, stating that house price declines are bottoming out as economic conditions improve.

Anthony Codling, Managing Director of equity research at RBC Capital Markets, anticipates modest rises rather than falls during 2024, emphasizing the firming foundations underpinning house prices.

Jake Stott, Founder at Mondo Mortgages, described January as a phenomenal month for the housing market, attributing the optimism to slashed interest rates and a surge in first-time buyers actively engaging in the market.

In summary, industry experts and indicators are aligning to paint a positive picture for the UK property market in 2024, fueled by falling mortgage rates, increased buyer confidence, and an overall optimistic outlook.