There was ‘a further slowing in annual house price growth’ last month, Nationwide has reported.

January house prices were 0.6 per cent down on December, making the annual rate of house price growth 1.1 per cent, down from 2.8 per cent in December.

‘However, there are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover’, said Nationwide chief economist Robert Gardner. ‘The fall in house purchase approvals in December reported by the Bank of England largely reflects the sharp decline in mortgage applications following the mini-Budget.

‘It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.

Nationwide’s latest monthly House Price Index came out ahead of the Bank of England’s decision to increase interest rates.

At its meeting on 1 February 2023, the Bank’s Monetary Policy Committee voted, by a majority of 7 to 2, to increase Bank Rate by 0.5 percentage points, to 4 per cent.

‘Global consumer price inflation remains high, although it is likely to have peaked across many advanced economies, including in the United Kingdom’, said the Bank.

‘Given the lags in monetary policy transmission, the increases in Bank Rate since December 2021 are expected to have an increasing impact on the economy in the coming quarters’.

Latest figures imply a further increase in Bank Rate to around 4.5 per cent in mid-2023, falling back around 3.25 per cent in three years’ time with a return to the 2 per cent target rate of inflation ‘in the medium term’.

However, said the Bank. ‘there are considerable uncertainties around this medium-term outlook’.

Meanwhile, inflation has begun to edge back and is likely to fall sharply over the rest of the year.