House price rebound ‘unlikely’, card spending slows

For sale, sold, homes, housing, property
House price growth will be modest, says Nationwide

UK house prices edged lower over the past year and are unlikely to see much growth in 2024, according to figures from Nationwide Building Society.

It said prices in December fell 1.8% from a year ago to £257,443, slightly higher than the 1.3% drop economists forecast but much less than the 10% drop many had predicted a year ago. 

Only Northern Ireland and Scotland recorded house price growth for the last three months of this year.

In Northern Ireland, the average house price rose by 4.5% to £184,593 between October and December. In Scotland it edged up 0.5% to £179,208.

Robert Gardner, the society’s chief economist, said there were some reasons for hope in 2024 although a sharp rebound in house prices was unlikely despite the prospect of lower interest rates.  

“Investors have become more optimistic that the Bank of England has already raised rates far enough to return inflation to target and will reduce rates in the years ahead,” he said. 

“Nevertheless, a rapid rebound in activity or house prices in 2024 appears unlikely. While cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.

“If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat (perhaps 0 to -2%) over the course of 2024.”

New data from Barclays showed growth in consumer card spending slowed sharply in 2023 as shoppers cut back amid rising interest rates.  

Card spending rose just 4.1% year-on-year – compared with 10.6% in 2022 (10.6%) – as consumers spent less on clothes, eating out and investing in home improvements. 

M&S credit card
Credit card spending has slowed

While restaurants suffered a 6.7% decline compared to 2022, consumers continued to prioritise “moments of joy and shared experiences,” boosting travel (+15.2%), entertainment (+7.5%), and pubs & bars (+5.9%).  

Movie hits such as Barbie, Oppenheimer and Avatar: The Way of Water fuelled a 6.3% increase in cinema spending. 

The travel sector continued to thrive with both travel agents (10.4%) and airlines (30.8%) seeing robust growth.  

A lacklustre 12 months for the stock market ended with a 10.5 points rise in the FTSE 100 in the shortened session to close the year at 7,733.24.

It was the best closing level since May and means the blue-chip index has climbed 2.4% during 2023.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Even though the Brexit hangover has eased, the UK’s stagnating economy and volatile political scene of recent years appears to be putting off investors.”

The top performing stock this year was Rolls-Royce, with the aero engine maker’s shares tripling in value under new chief executive Tufan Erginbilhic.

Marks & Spencer doubled the value of its shares amid robust trading despite a fairly downbeat consumer environment.

Next will issue a trading statement on Thursday which will provide a measure of the retail sector’s festive performance.

In his new year message, David Lonsdale, director of the Scottish Retail Consortium, said  a “worrying ad-hoc and piecemeal approach towards policy making has crept in” that will see a plethora of new taxes and levies imposed on retailers.

David Lonsdale
David Lonsdale: white-knuckle ride

“Scotland’s shopper footfall and consumer spending has struggled. Foot-traffic to retail destinations remains a sixth down on pre-pandemic levels.

The number of empty shops is a fifth above that prior to Covid and retail sales growth has been outpaced by rising prices for most of the second half of this year.

“Consumers, however, have benefited from fierce competition within the retail sector for shoppers’ custom as well as easing commodity prices. This has helped lower shop price inflation but has taken its toll on retailers’ profitability. In practice, consumers are spending slightly more money for fewer items which is squeezing retailers.

“The past year has been one of ups and downs for retail and the industry is hoping for less of a white-knuckle ride over the coming twelve months.”

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