The outlook for the UK housing market is “more positive” as prices improved at their strongest rate in a year, according to Nationwide.
The building society’s index found that the average house price had increased by 0.7% in January on the previous month – a significant turnaround from the December figures, which showed a 1.8% decline in prices.
The average UK house price was £257,656 in January, and was down 0.2% on a year earlier.
Robert Gardner, Nationwide’s chief economist, said: “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”
He said this had been driven by “encouraging signs” for buyers with mortgage rates continuing to trend down.
He added: “This follows a shift in view among investors around the future path of [interest rates], with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.”
Despite this optimism, the Bank is expected to keep its rate unchanged at 5.25% when it updates the market on Thursday. The US Federal Reserve is also expected to maintain its rate at between 5.25% and 5.5%, when it publishes an update on Wednesday night.
Verona Frankish, the chief executive of the online estate agent Yopa, said: “While we expect that interest rates will remain at 5.25% this week, this will only help to steady the market further, providing buyers with the confidence that they can proceed with their purchase without the goalposts of mortgage affordability moving during the process.”
Nationwide also pointed to data from the Royal Institute of Chartered Surveyors (Rics) that suggested the decline in inquiries from new buyers had halted, and there were “tentative signs” that more homes were coming on to the market.