Source - Alliance News

UK house price growth softened at the start of the year, a tracker from mortgage lender Nationwide showed Friday.

UK house prices rose 4.1% on-year this month, slowing from a 4.7% climb in December, according to Nationwide. The average price edged up 0.1% in January from December to sit at £268,213. In December, prices had risen by 0.7% on-month.

Nationwide analyst Robert Gardner commented: ‘The housing market continues to show resilience despite ongoing affordability pressures.’ Gardner added: ‘While there has been a modest improvement over the last year, affordability remains stretched by historic standards.’

Affordability improved slightly last year as ‘earnings growth marginally outpacing house price growth’, according to a recent Nationwide study.

Gardner added: ‘A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay – well above the long-run average of 30%. Furthermore, 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.’

In focus in the UK housing market this year is a looming stamp duty policy change.

From the end of March, the temporary increase in the zero-rate stamp duty thresholds will end. For first-time buyers of a home under £500,000, the zero-rate band falls to £300,000 from £425,000 currently. For other home buyers, the threshold is to be reduced to £125,000 from £250,000. The measures were announced by UK Chancellor Rachel Reeves in the October autumn budget.

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