The growth of UK house prices has slowed for the first time in 6 months, according to the most recent Nationwide House Price Index.
In January 2021, annual price growth slowed to 6.4%, down from 7.3% in December. So, while prices are not falling, this change in momentum might suggest that growth could soon stop and perhaps even reverse.
As it stands, the average UK house price is now £229,748.
With just two months left of the stamp duty holiday, due to expire on 31st March, this is an important moment for the UK housing market. If the SDLT holiday does indeed end, how will the market react? Will buyer demand fall off a cliff and house prices drop significantly?
Or will MPs decide to extend the deadline beyond the end of March? They are, as we speak, debating the decision in parliament and we will keep you posted as soon as we know more.
Regarding the price index, Robert Gardner, Nationwide’s chief economist, said:
“January saw the annual rate of house price growth slow modestly to 6.4%, from 7.3% in December.
“House prices fell by 0.3% month on month, after taking account of seasonal effects – the first monthly decline since June.
“To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.
“While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months.”
Homeownership on the rise
Nationwide also revealed that homeownership rates in the UK have increased for the third year in a row, both those owned with a mortgage and those owned outright.
The latest English Housing Survey published by the Ministry of Housing, Communities & Local Government (MHCLG) shows a slight increase in the homeownership rate from 63.8% in 2019, to 64.6% in 2020. Despite the increase, this remains well below the 2003 peak of 70.9%.
54% of England’s 15.4 million households are owned outright by the occupants, and 63% of those occupants are aged 65 or over.
