The 0.7% m/m rebound in the Halifax measure of house prices in January suggests the housing market started 2026 on a stronger footing than the 0.3% m/m rise on the Nationwide index implied. We think house prices will rise by an above-consensus 3.5% in the year to Q4 2026. But if Starmer and/or Reeves were to be replaced by a less fiscally responsible top team, a possible rise in gilt yields may mean mortgage rates fall by less and house price growth is softer than we expect.
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