Boost in consumer sentiment mirrored by price growth
Monthly house price growth rose to 0.6% in January according to the Nationwide index, taking rolling annual growth up from 2.5% to 3.1%.This is a more robust level of annual growth than the index has recorded for ten months.
RICS surveyors were more positive in December and January than they have been since June 2017. The number of surveyors reporting price growth grew significantly, to a clear majority, in December and continued in January. Reports of new enquiries remained steady from November to January but the last month saw a drop in reports of new instructions. The two measures continue to be closely aligned so there is unlikely to be any pressure on house prices in either direction.
December saw a 34% drop in the number of mortgage approvals compared to November, according to data from UK Finance. December always sees relatively low mortgage activity but this is an unusually large dip, consistent with low sentiment amongst surveyors and consumers alike. However, there was a moderate bounce in consumer confidence in the economy according to the January GfK consumer survey. Sentiment remains below the long term average, but it is more buoyant than it has been since May 2017. The February meeting of the Monetary Policy Committee kept the base rate at 0.5% but the Bank of England signalled clearly to expect rises this year in order to control inflation, which remains stubbornly above the 2% target.