Nationwide reveals what’s happening to house prices across the UK ahead of Bank of England rate decision
HOUSE price growth has slowed at the start of January, according to Nationwide.
The building society said the average price of a property increased by just 0.1% month-on-month.
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This was lower than a 0.7% rise recorded in December.
The annual rate of house price growth also slowed to 4.1% in January, compared with 4.7% in December.
House prices are still rising but at a slower pace.
Across UK, the average price of a home stood at £268,213 in January.
Robert Gardner, Nationwide’s chief economist, said the latest figures show a “modest slowing in the annual pace of growth” compared to last month.
He said: “The housing market continues to show resilience despite ongoing affordability pressures.”
“House prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9.
“Consequently, the deposit hurdle remains high. This is a challenge that has been made worse by the record increase in rents in recent years, which, together with the cost-of-living crisis more generally, has hampered the ability of many in the private rented sector to save.”
The figures come ahead of the Bank of England‘s interest decision decision next Thursday, February 6.
Experts have forecast the headline rate is to be cut from 4.75% to 4.5%.
Lenders use the base rate to determine the interest rates offered to customers on savings and borrowing costs, including mortgages.
This comes after the Office for National Statistics (ONS) said the Consumer Price Index (CPI) measured 2.5% in the 12 months to December.
This was down from 2.6% in November, the highest since March, and comes amidst market turmoil caused by increased government borrowing.
However, inflation is still above the BoE’s 2% target, putting pressure on under-fire Chancellor Rachel Reeves.
Buyers are also facing increasing pressure ahead of Stamp Duty rises this April.
Currently, first-time buyers do not have to pay stamp duty on the first £450,000 of a property purchase.
But from April the threshold beyond which they must pay the tax will plummet to £300,000.
Meanwhile, home movers currently only pay land tax on purchases worth £250,000 or more.
This threshold will be slashed to £125,000 for owners who want to move up the ladder.
WHAT IT MEANS FOR YOU
Alice Haine, personal finance analyst at Bestinvest said while potential rate cuts and easing inflation could help buyers “affordability levels remain stretched by historical standards.”
But she added that the prospect of more support from the Government if “proposals to loosen lending rules go ahead” could help improve the outlook.
Banks could soon be encouraged to offer more loans to people with smaller deposits and loosen limits on how much they can borrow.
Meanwhile, affordability checks which lenders use to see how much you can pay off each month could also take into account rental payments.
A major barrier for many buying a first home is the stringent checks that look at income to calculate this.
The potential shake up comes as part of plans by Chancellor Rachel Reeves to kickstart the economy.
One of the ideas reportedly floated is to allow banks to give more loans to buyers with smaller deposits.
Deposits are cash payments paid upfront by a person looking to buy a house and are worth a percentage of the property’s value.
Most first time buyers pay a 20% deposit on their first home. In December 2024 the average price of a house was £360,197, according to Rightmove.
That means wanna-be buyers would need to pay a deposit of £72,000 in order to be accepted for a mortgage.
WHO ELSE TRACKS HOUSE PRICES
Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It’s one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, this doesn’t include “cash buyers” who buy without needing a mortgage.
Rightmove and Zoopla also publish monthly house price data.
The former is based on asking prices from the property listings on its website.
Zoopla on the other hand uses sold prices, mortgage valuations and data on agreed sales.
Neither property website takes into account the price a property actually sold for like the ONS Land Registry, which could end up being higher or lower – and some might not even sell at all.
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What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.
Help to Buy equity loan – The Government will lend you up to 20% of the home’s value – or 40% in London – after you’ve put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you’re restricted to specific ones.
Mortgage guarantee scheme – The scheme opens to new 95% mortgages from April 19 2021. Applicants can buy their first home with a 5% deposit, it’s eligible for homes up to £600,000.
