The UK property market recorded it's sixth consecutive month of increase, but the pressures are building towards the inevitable slowdown. The numbers from Nationwide and Zoopla.
January is often a slow month before the spring peak in activity. Not so this year as the rate of house prices accelerated. At the city level, it is again the North and the Midlands which are seeing the strongest gains.
Nationwide's numbers for January
Housing demand has remained robust. Mortgage approvals for house purchase have continued to run slightly above prepandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.
Zoopla/Hometrack's top 5 cities
Liverpool and Manchester lead the way in terms of price growth in
The trend towards larger homes is set to continue for some time, but at a slower pace than seen so far, and the stamp duty holiday is now behind us. Estate agents are reporting an increase in new listings in January. If this continues, it will take some of the pressure off the supply/demand imbalance.
A factor becoming increasingly relevant is the growing disparity between property price rises and income growth. House price increases have far outpaced wage growth over the last year, so affordability has become stretched.
Money markets have priced in an imminent rise in interest rates. If, as widely expected, lenders increase the rate for new loans, the effect on demand will be immediate. With inflation reaching a thirty year high, more conservative lending policies may further dampen demand.
Most commentators' forecasts for property price rises this year remain in the 3% to 5% range.