UK annual house price growth eased to 4.1% in January making the average home worth £268,213, data from Nationwide shows, but still marked five months of rising prices.
Average homes are 0.1% more expensive than they were in December month-on-month, or 4.7% higher from a year ago, according to the lender’s latest house price index.
House prices have been rising since September.
Nationwide chief economist Robert Gardner says: “The housing market continues to show resilience despite ongoing affordability pressures.
He adds: “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.”
MT Finance director of specialist lender says: “With Nationwide’s numbers further indicating a confident market, actual growth in prices is very minimal as buyers face a challenging period due to affordability.
“Although rates remain reasonable, many in the market were hoping for a further cut by now, and are hopeful it won’t be long before we get one.
“More flexibility is needed from lenders to help buyers onto the ladder, and many are questioning whether the Chancellor’s [Rachel Reeves] growth message is realistic as little help has been evident so far.”
Quilter mortgage expert Karen Noye adds: “Chancellor Rachel Reeves has backed plans by the FCA to examine ways of allowing more mortgage risk-taking by banks to help more people own their own homes.
“The difficulties for FTBs have a knock-on effect across the housing market. Without them, the market risks becoming ‘glued up,’ with chains stalling and transactions slowing down. Existing homeowners looking to sell and move up the ladder rely on first-time buyers to keep things moving.”
