House price growth slowed its pace at the start of the year, registering at 6.4 per cent, according to Nationwide.
This compares to 7.3 per cent recorded in December 2020 and, with a monthly change of -0.3 per cent compared to a 0.9 per cent upswing in December 2020, heralds the first time growth has slowed monthly since June 2020.
The average house price in the UK now stands at £229,748, Nationwide adds.
It also says that home ownership is on the rise for the third year in a row, going from 63.8 per cent in 2019 to 64.6 per cent in 2020. However, Nationwide continues, this is some way off the peak of 70.9 per cent seen in 2003.
The lender says that the slowdown is likely a tapering of demand ahead of the stamp duty holiday, which, Nationwide chief economist Robert Gardner explains, “prompted many people considering a house move to bring forward their purchase.”
He continues: “The typical relationship between the housing market and broader economic trends has broken down over the past nine months. This is because many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.”
Gardner believes that if the stamp duty holiday ends as planned and labour market conditions weaken further, “housing activity is likely to slow, perhaps sharply, in the coming months.”
Fine & Country managing director Nicky Stevenson says, however: “This was supposed to be the month that legions of buyers effectively threw in the towel and moderated their offers having been forced to remove the stamp duty tax break from the equation.
“Yet, despite everything, this market is still clinging firmly to strong annual price increases and this is further evidence that, while the stamp duty tax break was a catalyst for the mini-boom, it’s not the main motivator pouring fuel on this fire.
“This isn’t really that surprising. By the end of last year, the market’s gains had already eroded the tax benefit of the chancellor’s scheme, which already suggested there was more going on. Those who benefit least are also those more likely to be older, with families and most in need of more space. These households are also more likely to have the money to make that move happen. They are responsible for the narrative that has characterised the past nine months.
“Continued talk of negative interest rates isn’t doing anything to cool demand for mortgages either and the housing market could still have a few more surprises up its sleeve this year,” she concludes.
Buraq founder Adnan Shah adds: “A slight nudge southwards is a positive start to a year that had a lacklustre future written for it. January was arguably the sternest test of the residential market since the pandemic began.
“The initial shutdown last year stemmed a lot of panic, whereas last month’s statistics demonstrate that the residential market is actually much more willing to shrug off the sort of temporary economics that reach our ears daily than people give it credit for.”
And Andrews Property Group chief executive David Westgate opines: “The end of the stamp duty holiday and the threat of rising unemployment will of course put some downward pressure on prices, but we do not expect activity levels to drop off sharply.
“As more and more people are vaccinated against Covid-19, they will want to get on with their lives, and buying and selling property will play a key role in that.
“Many households will have sat tight despite the stamp duty holiday and there is potential for a second wave of activity during 2021.
“The feel good factor as we hopefully emerge from the worst days of the pandemic could comfortably offset the very clear economic challenges the economy faces.”
