Against expectations, house price growth picked up last month, Nationwide's latest house price index has revealed. Specifically, annual growth increased from 2.6% in December to 3.2% in January.
Robert Gardner, Nationwide's chief economist, called the acceleration "a little surprising", as household incomes are still being squeezed
and retail sales have been disappointing. An annual growth rate above 3% has not been seen since June.
The figures further revealed that there was no change in monthly growth, with a month-on-month increase of 0.6% recorded in both January and December. As a result, the average house price stood at £211,756 in January, up only slightly from £211,156 in December, but surpassing the previous high of £211,671 recorded in July 2017.
Given that house prices are still increasing, homeowners might find this a great time to consider remortgaging, to take advantage of both high house prices and decently low mortgage rates. Indeed, Robert expects mortgage interest rates "to remain low by historical standards."
However, he also stated that "mortgage approvals declined to their weakest level for three years in December, at just 61,000. Activity around the end of the year can often be volatile, but the weak reading comes off the back of subdued activity in October and November (monthly approvals were around 65,000 per month compared to an average of 67,000 over the previous 12 months)."
With few signs of an imminent pickup in the mortgage market, a "lack of supply is likely to be the key factor providing support to house prices," Robert concluded. This is bad news for first-time buyers, who will likely continue to struggle to find an affordable house. The only bright side is that they, too, can benefit from low mortgage rates, once they get their 5% deposit together.
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