House prices grow more than expected in January - Nationwide
British house prices grew more than expected in January, according to a survey released by mortgage lender Nationwide.
Prices were up 3.2% on an annual basis compared to a 2.6% jump in December, beating expectations for a 2.5% increase.
On the month, house prices were up 0.6%, in line with December and ahead of expectations for a 0.2% rise.
Nationwide’s chief economist Robert Gardner said: “The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months. 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.
“But activity has been subdued on both the demand and supply side of the market. The flow of properties coming onto estate agents’ books has been more of trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house prices.
“How the housing market performs in the year ahead will be determined in large part by developments in the wider economy. Brexit developments will remain important, though these remain hard to foresee.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics said current momentum can’t last.
“The rise in year-over-year growth in Nationwide’s measure of house prices to its highest rate since March is hard to reconcile with virtually all other timely indicators. Online portal Rightmove, for instance, reported that asking prices rose a mere 1.1% year-over-year 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 collapsed in December to their lowest level since January 2015.
“Meanwhile, consumer confidence has deteriorated, real wages have fallen and mortgage rates have begun to increase. Admittedly, most first-time buyers no longer have to pay stamp duty and the supply of existing homes coming on to the market has contracted too, underpinning prices. Nonetheless, 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.”