UK house prices rise in January

For sale sign

The average cost of a home in the UK rose by 0.7% from December to January, according to the latest data from Nationwide.

Prices were still down slightly compared to a year ago, but the annual decrease shrank from 1.8% in December to 0.2% in January.

It comes as mortgage rates continue to fall.

Buyers now pay an average of £257,656, up from £257,443 a month ago. However, there is considerable variation in prices and affordability across the country.

Affordability pressures are greatest in London, the south of England and East Anglia, while Scotland and the North are the most affordable regions, said Nationwide’s chief economist, Robert Gardner.

“These variations have led to stark differences emerging between those who would like to buy and those who are actually able to do so. This is most pronounced in London, where the average income of actual first-time buyers (for a single borrower) is around 55% higher than the average income in the capital (for an adult fulltime worker).

“Similarly, in the South East and East of England, the average income of actual first-time buyers is around 25% above the average income in these regions.”

Gardner noted that in 2022/23, nearly half of first-time buyers had some help raising a deposit, either in the form of a gift or loan from family or friends, or through inheritance — up from 27% in the mid-1990s.

Economists expect the Bank of England to start cutting the base rate in the spring or summer.

Members of the central bank’s Monetary Policy Committee are due to meet this Thursday to make the next decision on interest rates.