The UK property market has witnessed a strong start to the year, with the fastest house price growth since 2005.
According to Nationwide's house price index, house prices rose annually by 11.2% in January 2022, up from 10.4% in December 2021.
As of last month, the average price of a property in the UK was £255,556, which increased by 0.8% from £254,822 in December.
But property experts have predicted that the housing market is likely to slow down later this year due to affordability.
READ MORE:
Nationwide have now warned that reduced housing affordability is likely to dampen market activity and house price growth - as people’s household bills are also increased by the wider surge in living costs.
Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth accelerated to 11.2% in January, the strongest pace since June last year, and the strongest start to the year for 17 years.
“House price growth has outstripped earnings growth by a wide margin since the pandemic struck and, as a result, housing affordability has become less favourable.M
“While the outlook remains uncertain, it is likely that the housing market will slow this year."
Gardner said that the current housing market prices are making it increasingly difficult for first time buyers to secure a home.
“For example, a 10% deposit on a typical first-time buyer home is now equivalent to 56% of total gross annual earnings, a record high," he explained.
“Similarly, a typical mortgage payment as a share of take-home pay is now above the long-run average, despite mortgage rates remaining close to all-time lows.
“Reduced affordability is likely to exert a dampening impact on market activity and house price growth, especially since household finances are also coming under pressure from sharp increases in the cost of living.
“Consumer price inflation reached 5.4% in December, its fastest pace since 1992.
“This is more than double the Bank of England’s 2% target, and inflation is set to rise further in the coming months as the energy price cap is increased."
Mortgage brokers from Manchester have reacted to the latest Nationwide house price index and shared their views.
Manchester-based Jamie Thompson of Jamie Thompson Mortgages : "Around Manchester I'm seeing as many first-time buyers as there's ever been, but they're trying to buy as few properties as there seems to have ever been.
"This is probably because everyone above them on the ladder who might have been moving this year brought their moves forward to pre-September 2021 due to Rishi's super stamp-duty slash.
"The stamp duty holiday has now driven prices to a level sadly beyond many first-time buyers. Another Government plan gone wrong."
Rob Peters, director of Altrincham-based Simple Fast Mortgage said: "Although 2022 might see more sensible levels of property activity, it's going to take an interest rate tsunami to put house buyers off.
"Ultimately, people need houses, and as there aren't enough houses, demand will remain high, and property prices will continue to rise. The lifestyle movers out there might decide not to move, as they don't really need to anyway.
"First-time buyers, and those who have welcomed a lockdown baby into the household, will continue to hunt for new homes."
