"The acceleration in house price growth is surprising since affordability remains stretched by historical standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels"
- Robert Gardner - Nationwide
The latest figures released by Nationwide this morning have revealed that average house prices now stand at £268,144 - just 1% below their all-time peak set during summer 2022.
The data shows that UK house prices rose by 1.2% month on month, with annual growth accelerating to 3.7% from 2.4% in October – its fastest pace in two years.
Robert Gardner, Nationwide's Chief Economist, said: “The price of a typical UK home rose by 3.7% year on year in November, a strong rebound from the 2.4% recorded the previous month and marking the fastest rate of annual growth for two years (November 2022).
"House prices increased by a robust 1.2% month on month, after taking account of seasonal effects, the largest monthly gain since March 2022. House prices are just 1% below the all-time high recorded in the summer of 2022.
“The acceleration in house price growth is surprising since affordability remains stretched by historical standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.
“The pickup in price growth is unlikely to have been driven by upcoming stamp duty changes since the majority of mortgage applications commenced before the Budget announcement.
Market activity
“Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the higher interest rate environment.
“Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year. Household balance sheets are also in good shape with debt levels at their lowest levels relative to household income since the mid-2000s
“Gauging the underlying strength of the market will be more difficult in the coming months as the upcoming stamp duty changes will provide an incentive for buyers to bring forward house purchases to avoid paying additional tax.
Transactions
“This is likely to lead to a jump in transactions in the first three months of 2025 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. This has the potential to shift the demand/supply balance in the near term and impact price movements.
“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Tom Bill, head of UK residential research at Knight Frank, said: “A feeling the Budget could have been worse, the prospect of a stamp duty rise next April and the dwindling availability of sub-4% mortgages have all driven activity over the last two months. The main risk facing the UK housing market now is whether Labour’s Budget will work in the long term.
"Any extended period of upward pressure on unemployment, inflation and borrowing costs would put downward pressure on house prices and transaction volumes, and we have revised down our forecasts marginally for the next three years.”
Nathan Emerson, CEO of Propertymark comments: “It’s likely that as both the confidence and affordability of buyers increase due to the easing of inflation, this has spurred on activity in the market and as a result, we are starting to see health restored in the form of steady house price growth.
“What we are likely to witness now is a further spike in activity especially for buyers in England and Northern Ireland as some rush to complete before the upcoming Stamp Duty rises due to commence from April 2025.”
Matt Thompson, head of sales at Chestertons, says: “November’s property market saw an increasing number of first-time buyers who were and still are motivated to purchase a property before the stamp duty changes in April 2025. This, in addition to high demand from house hunters in general, led to more sales being finalised than in November of last year.
"With the current level of buyer activity expected to continue well into the new year, we predict London properties will hold their value or see a gradual value increase of up to 3% over the course of next year.”
Foxtons CEO, Guy Gittins, says: “After the rate of house price growth slowed in the lead up to the Autumn Budget, the latest figures suggest the market is once again starting to accelerate.
"This consistent positivity demonstrates the current strength of the market despite the complications posed by wider economic headwinds. Over the last 12 months we’ve seen a huge increase in new buyer volumes, viewings and offers made and there is a very healthy level of stock currently on the market. So, whilst house prices are climbing, there is certainly a good level of stock for buyers to choose from and the market isn’t overheating due to the usual supply and demand imbalance.
"The market traditionally pauses for breath during the festive period, however, we’re seeing a flurry of activity driven by buyers looking to secure stamp duty relief before next April’s deadline. We anticipate the start of next year to be much the same, although those buyers who are looking to take advantage of current stamp duty relief thresholds need to be acting now to stand a chance of completing in time.”
CEO of Yopa, Verona Frankish, commented: “Whilst there may have been a momentary pause ahead of the Autumn Budget, it’s clear that market activity has accelerated significantly since then, with the driving factor being the government’s failure to extend current stamp duty relief thresholds beyond March of next year.
"As a result, we can expect a very busy end to 2024 and it’s likely that both mortgage approval levels and house prices will trend upwards as the year comes to a close.”
Director of Benham and Reeves, Marc von Grundherr, commented: “Nothing supercharges the property market quite like a stamp duty deadline and with the government confirming that the countdown is now on, buyers have flooded the market in the hope of completing on a purchase before April next year.
"This uplift in buyer demand will ultimately push house prices up over the coming months and so if you are contemplating selling up, now is a very good time to do so.”
