UK house prices reached an annual growth rate of 4.1% in January, slowing from 4.7% in December, Nationwide has reported.

The building society’s latest house price index (HPI) revealed that the average house price in the UK now stands at £268,213, which is a month-on-month increase of 0.1% after taking account of seasonal effects.

Chief economist at Nationwide, Robert Gardner, said that the housing market has continued to "show resilience despite ongoing affordability pressures".

He stated: "As we highlighted in our recent affordability report, while there has been a modest improvement over the last year, affordability remains stretched by historic standards. A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay – well above the long-run average of 30%.

The HPI also revealed that house prices "remain high" relative to average earnings.

Nationwide said that the "deposit hurdle remains high", which is a challenge that has "been made worse by the record increase in rents in recent years".

Gardner added: “It’s not surprising that a significant proportion of first-time buyers have to draw on help from friends and family to raise a deposit. In 2023/24, around 40% of first-time buyers had some assistance raising a deposit, either in the form of a gift or loan from family or friends, or through an inheritance.”

However, it has been noted that there was "relatively little change" in overall levels of home ownership in recent years, with the latest English housing survey, produced by the Ministry of Housing, Communities and Local Government, showing that homeownership rate “remained stable” at 65%.

In conclusion, Gardner said: "Looking at trends over the long term, homeownership rates among younger age groups, in particular those aged 25-34 and 35-44, remain well below their 2004 peaks. Homeownership amongst those aged 25-34 has been gradually improving over the last decade however and now stands at 45%, compared to 36% in 2014, though still below 2004 peak of 59%.

"The number of households in England owning their homes outright has increased by 1.3 million over the past ten years to reach 8.7 million. This reflects demographic developments, in particular a rise in the number of older households (aged 65+), where the number owning outright has increased from 4.5 million to 5.4 million over the last decade."

---