Nationwide: House prices creep up for the first time in over a year

Average property prices have risen, Nationwide’s latest house price index shows.

The average property price has crept up by 0.7% month on month, which pushed up prices annually by 1.2%- the first yearly upward trend since January 2023. 

It follows the same monthly increase last month and house prices falling by 0.2% in a year to January. 

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The average property price now stands at £260,420, according to the building society.

“House prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects,” Robert Gardner, Nationwide's chief economist says.

The rise coincides with the latest Zoopla house price index which also showed a decline in property prices plummeting.

The uptick is largely down to lower mortgage rates which started to filter through at the end of 2023. The latest Bank of England data also showed mortgage approvals had jumped in January by 7% compared to December.

As a result, buyer demand has improved and “sellers have also been feeling more optimistic about attracting the right buyer for their home which has led to a slight increase in the number of properties being put up for sale,” Thomson adds.

Whilst inflation remaining stuck at 4% also helped affordability for some buyers, the BoE’s base rate decision coming up on 21 March could put a damper on the property market.

Will house prices continue to rise? 

Whilst Nationwide’s latest data shows house prices rising, this could be short lived depending on what happens with the base rate at the next Bank of England MPC meeting. 

Most experts believe we could see a cut in interest rates which is already feeding through to mortgage rates, despite its downward trend in the past couple of months. 

According to Moneyfacts, February started with the average two-year mortgage rate at 5.56%, but by the end of the month, rates creeped up to 5.75%. 

Sarah Coles, head of personal finance at Hargreaves Lansdown said:  “This isn’t a dramatic movement, but the direction of travel is important. If rates keep drifting up, we could see buyers hit pause.”

Coles warns this could lead to further affordability issues. “As average house prices rise back over £260,000 it raises another problem, because higher house prices, coupled with rising mortgage rates, risk pushing property out of reach for buyers again.”

In the meantime, some buyers are still “ sitting on the fence waiting to see when interest rate cuts happen and whether mortgage rates improve further before they plough into the market,” Alice Haine, Personal Finance Analyst at Bestinvest says. 

Whilst there are three weeks until the BoE will meet to set the next base rate, the Spring Budget is only around the corner. 

Haines adds: “Hopes are pinned on a number of reforms to get momentum back into the market. 

“These include tweaks to Stamp Duty Land Tax, whether abolishing it entirely, extending existing stamp duty reliefs or scrapping it for first-time buyers and older homeowners looking to downsize at the end of their homeownership journey.”