Forget Trump. Forget Brexit. House prices are about to make a welcome return to polite dinner party conversation. And in a positive light.
According to the latest report from the Nationwide building society, house prices rose by 3.2% in January. The figures show that the average house price rose 0.6% to £211,756 in January, bringing annual price growth up to 3.2%.
The Nationwide described January's figure as "a little surprising",The Nationwide described January's figure as "a little surprising", especially so when there have been signs of weakening consumer activity elsewhere, especially in the retail sector over that all-important festive period. But it happened. The rate of growth was higher than the 2.6% rise seen in December.
And this happened with mortgage approvals at their weakest in three years. In the year to the end of December, 61,000 mortgages were agreed, compared to 67,000 in the previous 12 months.
However, the longer-term forecast is still pointing towards a general weakening of house prices, according to property watchers. Analysts say the surprise uptick in December doesn’t change the fundamental state of the UK housing market, which is expected to slow.
Looking ahead, the Nationwide said that a combination of positive factors, such as low unemployment and relatively cheap mortgages, coupled with some less positive factors, such as only modest growth in the UK economy and a squeeze on household budgets, would put a ceiling on house price rises.
Some, such as estate agent Savills are forecasting that national house price growth will slow by half, growing by 14.2% between 2018 and 2022, a drop-off from the 28% price growth seen in the previous five years.
There does seem to be something of a tussle going on between supply and demand, making it more akin to a sellers’ market. Anecdotal evidence suggests that competitively-priced properties are often selling at a small premium, because there is a shortage of supply.
A new era?
However, while house prices continue to rise, at however modest a rate, more and more would-be first-time buyers find themselves squeezed out of any chance to buy. Nationwide has already seen a long-term trend emerging whereby young adults, aged between 25 and 34, who would be the ones expected to be clamouring to get a foot on the property ladder, are ruling out home ownership entirely.
And the recently-published English Housing Survey adds weight to that. It showed there has been a significant fall in the number of homeowners in this age group over the past 10 years, from 57% to 37%.
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