Nationwide housing survey says sentiment among housebuyers may be turning positive.

House prices increased by 0.4% in January according to a Nationwide housing price survey. The building society also reported an annual rate of increase in house prices of 12.6% but predicted that over the next 12 months house prices would rise by only 2%.

Despite the increase in January’s house prices, activity remained low with mortgage approvals dropping to 77,000 in November, which Nationwide said was the lowest level since April 1995.

Nationwide said that the market had stabilised over the last six months and said that sentiment among housebuyers “may be about to turn positive”.

House prices for the six months have risen by 0.25% a month on average over the last six months, compared to 1.7% on average for the previous six months.

Nationwide aid that it expected interest rates to have peaked at 5%. Nationwide economist Alex Bannister said: “Since last summer the focus of homeowner and would-be homeowner concern appears to have shifted from ‘how high interest rates will rise’ to the future direction of house prices.”

“Consequently it is increasingly a buyers’ market with prospective buyers staying on the sidelines until the outlook becomes more certain.”