House prices recover at fastest rate in two years

New research from Nationwide’s Housing Index shows that house prices rose year-on-year by 3.7% last month – up from 2.4% in October.

The beginning of December brings a lot of Christmas cheer; though it’s not normally tailored to the housing market. However, new research that was published this morning from Nationwide’s Housing Index shows house prices increased at their fastest annual rate in two years last month.

Experts found in November house prices rose 1.2% – the largest monthly increase since March 2022. What’s more, the costs of properties were also seen to increase by 3.7% year-on-year last month, which means homes are now just 1% below their all-time high recorded in summer 2022.  

‘The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels,’ Robert Gardner, chief economist at Nationwide said.

‘Providing the economy continues to recover steadily, as we except, 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.’

Despite this positive news, various industry experts have warned that the market could slow again as a result of interest rates still being high and the added fiscal stimulus from the Autumn Budget. Throughout this year the Bank of England slashed interest rates twice but they still stand 4.75%.

Guy Gittins, CEO of Foxtons, said: ‘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.’

On the subject of the Autumn Budget, changes to stamp duty were announced which may provide a short-term boost to the market as buyers look to avoid tax increases, but this will likely fade by 2025.

‘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,’ Guy continued. ‘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.’

Marc von Grundherr, director of Benham and Reeves, added: ‘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 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.’