UK House Price Growth Slows More Than Forecast

(RTTNews) - UK house prices growth slowed more than expected in January largely reflecting high mortgage rates, data published by the Nationwide Building Society showed on Friday.

House prices gained only 0.1 percent in January. This follows a 0.7 percent increase in December and also came in weaker than economists' forecast of 0.3 percent.

House prices grew 4.1 percent on a yearly basis, slower than the 4.7 percent rise in December. Prices were expected to climb 4.3 percent.

"The housing market continues to show resilience despite ongoing affordability pressures," Nationwide Chief Economist Robert Gardner said.

Furthermore, the economist noted that house prices remain high relative to average earnings and the deposit hurdle remains high.

Gardner said that it is not surprising that a significant proportion of first-time buyers have to draw on help from friends and family to raise a deposit.

Despite these challenges, there has been relatively little change in overall levels of home ownership in recent years, the economist observed.

Further, Gardner said that there was a slight increase in the number of people owning their home with a mortgage, although the majority of homeowners own outright, which is largely a reflection of demographic trends.

Capital Economics' economist Alex Kerr said higher mortgage rates started to weigh on prices. However, it won't last, he said.

The economist expects the BoE to cut its key rate from the current 4.75 percent to 3.50 percent in early 2026. This suggests that mortgage rates will fall from 4.6 percent in December to around 4 percent next year.

Kerr forecasts house prices to grow by an above-consensus 3.5 percent in the year to fourth quarter of 2025 and 4.5 percent in the year to fourth quarter of 2026.