House prices rise by 3.7% in November with growth at fastest rate in two years

UK house prices surprisingly jumped more than expected in November and at the fastest rate in two years, driven by strong wage growth and declining mortgage rates, according to the Nationwide. 

The average prices of a house sold in November rose 1.2 per cent compared with October, lender Nationwide reports, to £268,144 – the largest monthly gain since March 2022.

House prices are now just 1 per cent below the all-time high recorded in the summer of 2022 ahead of Liz Truss’s mini-budget.

Property values rose 3.7 per cent in the year to November, according to the Nationwide house price index. The rise was up from a 2.4 per cent lift in October.

Robert Gardner, Nationwide’s chief economist, said: “House prices increased by a robust 1.2 per cent month-on-month, after taking account of seasonal effects, the largest monthly gain since March 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.”

He said gauging the underlying strength of the market will become harder in coming months as the upcoming stamp duty changes will provide an incentive for buyers to bring forward house purchases to avoid paying additional tax.

“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. 

“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.

Experts do not believe the sudden jump is driven by the increase in stamp duty coming in April, when the temporary increase in the threshold for payment will drop from £425,000 to £300,000. Nationwide forecast there will be a jump in transactions in the first three months of 2025, as buyers try to secure deals before changes to stamp duty kick are introduced next April.

Nathan Emerson, chief executive of estate agent body Propertymark, said: “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.”