In January, UK house prices experienced their sharpest increase at the start of a year since 2020, driven by a surge in new sellers entering the market, according to data from Rightmove.
Significant Monthly and Annual Growth
Average house prices climbed by 1.7% in January compared to December, a notable recovery from the 1.7% decline observed the previous month. Annually, house price growth accelerated to 1.8% in January, up from December’s 1.4%.
The increase in buyer choice reached its highest level since 2015, with a record number of new sellers entering the market after Boxing Day. Rightmove reported that properties listed for sale were 11% higher than the same period last year.
Expert Insights on Market Dynamics
Colleen Babcock, a property expert at Rightmove, commented on the strong seller activity. “We’ve seen a robust start to the year in asking prices from new sellers, though competition among sellers is higher than anticipated, which may temper price growth in the coming months,” she said.
Rightmove anticipates 1.15 million property transactions this year, with an average asking price increase of 4%. However, Babcock cautioned about uncertainties, including potential interest rate reductions and the impact of increased stamp duty rates for many home movers starting April 1.
Shifting Economic Conditions
Matt Smith, a mortgage expert at Rightmove, highlighted the volatility in market sentiment. The announcement of high government borrowing costs was quickly followed by better-than-expected inflation data, illustrating how rapidly economic conditions can shift.
“The markets are still expecting a rate cut in February, but the outlook becomes less clear after that,” Smith said. He emphasized the need for time to better understand the trajectory of interest rates in 2024.
Bank of England’s Policy Stance
In December, the Bank of England held its benchmark Bank Rate steady at 4.75%, following two quarter-point reductions in August and November. The central bank’s future policy decisions will likely influence the housing market’s direction in the months ahead.
Conclusion
The UK housing market has started 2024 on a strong note, with rising prices and an influx of new listings. While optimism prevails, uncertainties surrounding interest rates and fiscal policies loom, potentially influencing the market’s momentum in the coming months.