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"Belter of a January" as house prices rise by 0.7%- Nationwide

ended 31. January 2024

This morning at 07:00, the Nationwide published its  January House Price Index, which showed prices rose 0.7% this month. There was further recovery in the annual rate of change, with prices down just 0.2% compared with a year ago.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:

“UK house prices rose by 0.7% in January, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth from -1.8% in December to -0.2% in January, the strongest outturn since January 2023.

“There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down. This follows a shift in view amongst investors around the future path of Bank Rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.

“These shifts are important as this led to a decline in the longer-term interest rates (swap rates) that underpin mortgage pricing around the turn of the year. However, the partial reversal in recent weeks in response to stronger than expected inflation and activity data cautions that the interest rate outlook remains highly uncertain.

“While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive. The most recent RICS survey suggests the decline in new buyer enquiries has halted, while there are tentative signs of a pickup in the number of properties coming onto the market.

“How mortgage rates evolve will be crucial, as affordability pressures were the key factor holding back housing market activity in 2023. Indeed, at the end of 2023, a borrower earning the average UK income and buying a typical first-time buyer property with a 20% deposit had a monthly mortgage payment equivalent to 38% of take-home pay – well above the long run average of 30%.

“If average mortgage rates were to trend down to 4%, this would ease the mortgage payments burden to 34% of take-home pay (assuming house prices and earnings are unchanged). However, other things equal, mortgage rates of 3% (still well above the lows seen in the wake of the pandemic) would be needed to bring this measure of affordability back towards its long run average.”

Newspage asked property and mortgage experts for their views, below.

21 responses from the Newspage community

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Chris Schutrups
Founder at The Mortgage Hut / William James Wealth Management
Compared to this time last year, we have seen roughly double the number of enquiries from people looking to buy. I think people have now become used to the new rate world that we're in and expect the Bank of England base rate in the short- to medium-term to sit between 4% and 5%. People now understand how much things will cost but have factored it all in and the result is more confidence. People are making decisions based on the long-term, rather than the short term. Rents are also going up, so people are seeing the value of owning their own property where they at least control their own destiny. Rising rents are driving first-time buyers to quickly capitalise on the buyers' market while it still lasts.
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Denni Tyson
Mortgage and Protection Advisor at Henchurch Lane Financial Services
January has seen buyers enter the new year with more optimism due to mortgage rates falling, especially at the higher loan-to-values that apply to first-time buyers. Though it's still probably a buyers' market, enquiries are on the rise and the balance of power could shift soon enough. Home mover enquiries have increased, but with a sense of caution and seeing where their figures take them as they are acutely aware of the increased costs to homeownership. Hopefully we will see a steady period for the housing market that it so desperately needs.
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Jake Stott
Founder at Knox Mortgages
January has been an absolute belter for the housing market. The Nationwide House Price Index for January highlights the optimism that is emerging after a turbulent 2023. Since lenders decided to slash rates right from the start of the month, we've seen first-time buyers popping up like daffodils in spring. They're not just window-shopping now but are serious, with a mortgage in principle clutched in their eager hands and ready to haggle. Confidence is sky-high. Even those houses that have been languishing on the market are finally getting a second glance. Buyers are swooping in, backing themselves to secure a discount off the asking price. If January's anything to go by, the property market is in for a corker of a year.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
December saw the Scottish housing market take a breather, with purchase activity in hibernation, but remortgage activity holding steady. Fast forward to January 2024, and the market has exploded into action. Mortgage enquiries are soaring, signaling a resurgence in buyer confidence. First-time buyers are the driving force, injecting life into the sub-£200k market in Scotland. Moreover, those higher up the property ladder are emerging from the shadows and exploring mortgage options for upward or downward moves. With limited supply and strong buyer demand, competition for properties in Scotland remains fierce. In most areas, purchase prices continue to exceed home report values sigificantly. Unless we see any unexpected disruptions, 2024 looks poised to be another robust and positive year for the Scottish market.
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Graham Cox
Director at Bridging Hub
Demand from buyers in January has picked up where December left off, with a noticeable improvement from last Autumn. In my view, it's still very much a buyers' market, but we've noticed first-time buyers in particular are prepared to get much closer to the vendor's asking price than they were. As ever, affordability is the main problem. House prices haven't fallen nearly enough to compensate for the massive increase in mortgage costs.
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Steven Hargreaves
Mortgage and Protection Adviser at The Mortgage Co
It's been a positive start to 2024. New enquiries have been brisk, with a surge in first-time buyers keen to get onto the ladder. Interestingly, we have also seen fewer sellers accepting reduced offers, which was widespread in the last quarter of 2023. The dynamics of the market are changing. In comparison to the latter half of last year, there are many more buyers in the market. Ahead of the Bank of England base rate decision, quietly confident is our overall verdict. But the swap rate volatility of the past week or two shows we are not out of the woods yet.
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Michelle Lawson
Director at Lawson Financial
We have seen a surge of new business and, alongside the usual remortgage applications, an influx of first-time buyers and home movers itching to buy. We’ve also seen green shoots of investors looking at their options to expand their portfolios in what, for now, remains a buyers' market. These signs are vital and the tide has to change at some point. With all the data that is starting to trickle through, this could be the beginning of the end of tough times.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Month-on-month figures for December will likely show an increase in activity, but this masks the truth. Year on year, volumes and values will be significantly down. There is worse to come, as more people fall off the security of their fixed rates in 2024 that were near 1% and now near 5%. The economy is flatlining and the business community has no certainty over when there will be a General Election and some hope of fresh ideas. Until then, things will remain in the doldrums.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Confidence among new buyers and home movers has improved noticeably as they sense opportunity in the current market. With rates having fallen to a more digestible level, property prices remaining relatively low, and a lot of pent up demand, the number of buyers is on the up. There is a good window of opportunity for people to negotiate and execute their plans. But a warning: as buyer numbers increase, the pendulum could quickly swing in favour of sellers again. With increased interest and demand for their property, they'll be less inclined to discount the asking price.
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Craig Fish
Director at Lodestone Mortgages
Despite what these figures reveal, the real picture can only be evidenced in Land Registry data and thats about 5 months behind. Property prices are down, the economy is stalling, the real rate of inflation when you include owner occupied costs is high and increasing, and this is set to get worse this year as more people fall off historically low fixed rates onto something that at best is 3 times more than they're currently. The property market may have picked up but the economy is reeling and a lot of businesses are under real pressure, as evidenced by the 30-year high in company insolvencies.
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Justin Moy
Managing Director at EHF Mortgages
We have seen a significant shift in purchase enquiries, which have outnumbered remortgages and product transfers for the first time in 18 months. Many are first-time buyers taking advantage of the better rates on offer, as rents remain high and ownership can be cheaper, even with a small deposit. There has also been an uplift in enquiries from those with existing mortgages still with a few years to run on cheaper rates, looking to port their current deal in the short term. Even the Let-to-Buy option has been a topic of discussion with a handful of clients, as they look to buy without selling if the finances allow.
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Bob Singh
Founder at Chess Mortgages
January has been a busy month for enquiries, which was largely expected after Rightmove reported record Boxing Day viewing figures. Given that rates are expected to fall over the next two years, buyers are no longer waiting for the bottom, they’re making the move now. Property is still scarce but, due to the availability of competitive long-term fixed rates, more buyers are emerging by the day. Two-year fixed rates are proving popular. Buyers expect rates to fall in year 3 and they can take a 5-year deal at that time. Those potential buyers sitting on the fence are waiting for base rate to drop before making their move.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
All the mortgage rate cuts we've seen in January have bolstered confidence and lit a fuse under activity levels. We saw a real surge in property purchase enquiries in January, both from first-time buyers and home movers. The property market is bouncing back now and there's now a growing sense of optimism in the air. Yes, there are still some possible road bumps ahead, and swaps have been volatile, but currently things are looking much brighter.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Early indicators for January show demand for houses is still stable rather than booming, and did not plummet as was expected at various points last year. Lenders launching rate cuts very early in January provided a much needed boost to buyer sentiment. Further rate reductions could increase buyer enthusiasim in the coming months. We could see a switch back to a sellers' market particularly for properties in high demand. Things can turn on a dime in the current environment.
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Harps Garcha
Director at Brooklyns Financial
January has seen a significant upswing in activity, surpassing the levels observed during Autumn 2023, as enquiries evolved into concrete applications. Almost daily rate reductions by lenders have motivated numerous potential homebuyers to act on plans they had deferred in 2023. This uptick in activity reflects a heightened confidence within the market, accompanied by awareness of the economic landscape. This increased activity is evident across various segments, including first-time buyers and home movers. Zoopla's latest report further validates the current surge in purchase activity, showing a notable 13% year-on-year increase in buyer demand during the first month of 2024. However, despite these positive trends, conversations with local estate agents indicate that it remains a buyers' market. Sellers are still finding themselves compelled to adjust their asking prices downward during negotiations.
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Rohit Kohli
Director at The Mortgage Stop
Over the course of January we've seen the number of purchase enquiries leap significantly. The rate war between lenders who are battling it out for business has resulted in a surge in enquiries from both first-time buyers and buy-to-let investors, who are now much more active than the last few months of 2023. We've seen offers being accepted at, or close to, asking price and sellers are not really negotiating. I expect the indicies to start reflecting this in the coming months but with much uncertainty about the UK economy and wider events around the world it's quite possible for things to move in the opposite direction fairly quickly.
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Elliott Culley
Director at Switch Mortgage Finance
The mortgage market is going from strength to strength in January. With rates improving, there is a positive feeling that is feeding into borrowers' appetite to buy. Negotiations on price are different depending on the region of the UK, with some buying below asking price, whereas others are having to go above to secure properties.
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Akhil Mair
Director at Our Mortgage Broker
January witnessed a surge in demand for residential property, fuelled by early rate cuts from lenders. Buyers are increasingly confident, with more stepping forward to make purchases rather than just browsing. The shift signals a proactive approach among buyers to capitalise on favourable conditions including a reduction in mortgage rates and the advantage of being in a buyers' market. On the ground, a sense of activity and cautious optimism prevails. Buyers are negotiating assertively, while sellers sense conditions are turning against them once more due to the unexpected inflation print. There is real intrigue in the dynamics of the property market at present.
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Ying Tan
CEO at Habito
Demand has been explosive in January as lenders have jostled for position. We have seen enquires double, which has translated into more applications. Buyer confidence is returning to the market, albeit with one eye on the wider macro-economic environment. Sentiment on the ground is positive but this needs to be sustained if it's to have any material impact on house prices.
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Gary Bush
Financial Adviser at MortgageShop.com
House purchase activity really started to increase towards the end of January with Monday of this week seeing three times the level of new mortgage application enquiries than usual. We expect property indices to reflect this upward movement of sentiment and activity in the coming months and to see a busy spring. We're predicting that 2024 will see house price growth of 5%-7%.
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William Page
Head of Global Sales at IP Global
We've observed a substantial 47% surge in interest levels at IP Global between October and January, with particular emphasis on Scotland and Yorkshire. Affordability in these regions, compared to the south, has attracted significant attention, in light of more expensive financing. Buyers are capitalising on the current buyer's market with reduced competition. In terms of price movement, it's a mixed bag, but our research suggests that prices in the right markets will remain resilient. It's crucial to be discerning in this environment, as some markets may experience drops when existing homeowners transition off fixed-rate deals in the coming months.