House price growth in Britain witnessed a ‘surprise’ pick-up in January, where average house price values were pushed to new record highs. This was the finding of analysis by the Nationwide Building Society, which found that in January, annual house price growth accelerated to a 10-month high of 3.2%, up from 2.6% in December.
The average price of a property in Britain in January was £211,756, the highest Nationwide has ever recorded.
Nationwide’s chief economist, Robert Gardner, said the rise had come as a surprise, stating:
“The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months.”
Gardner noted how a lack of supply may be affecting house price growth.
“The flow of properties coming on to estate agents’ books has been more of a 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.
Brian Murphy, from the Mortgage Advice Bureau, reiterated the sentiment that it is the lack of properties available for sale that is contributing to houses selling at a premium, despite being “against a backdrop of jitters in terms of consumer spending and stalling wage growth.”
Jonathan Samuels, chief executive of property lender Octane Capital, delivered a similar message, that house prices are creeping up because of the lack of available homes for sale and low interest rates.
“The rebound in annual price growth is less about demand strength than supply weakness. Against a backdrop of squeezed incomes and Brexit-related uncertainty, demand is understandably subdued, but prices are being supported by the sheer lack of homes for sale and the low cost of borrowing,” said Samuels.
Nationwide has forecast that due to the modest growth in the economy, and many household budgets being squeezed, house price rises would be moderate in 2018.