Is Surprising House Price Leap A New Trend Or A Blip?
The UK property market has had a very small downturn over the past couple of years, one that some judges might say was surprisingly mild amid the pressure on buyer finances of the cost-of-living crisis, a brief recession last year and 14 base rate increases as the age of cheap money ended.
In recent months, prices have been rising modestly amid lower inflation, economic recovery and two base rate cuts. But most commentators have predicted this upward trend would also be gradual for some time, taking into account various tailwinds still impacting buyers. However, the latest
Nationwide House Price Index may have thrown that view into question.
The November survey indicated that prices had leaped 1.2 per cent month-on-month, taking the annual rate of growth to 3.7 per cent, compared with 2.4 per cent in October. This represented the highest annual growth rate since November 2022.
People looking for property for sale might worry that this could be the start of a trend for high prices, but Nationwide chief economist Robert Gardner suspected it will not be.
“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 observed.
Mr Gardner said upcoming changes to stamp duty may mean some purchasers trying to push through transactions before the changes hit in April, but over the next year or so, a steady economic recovery should mean the housing market grows “gradually”, helped by lower interest rates and “earnings outpacing house price growth”.
The other major national house price survey, for Halifax, is yet to publish its November figures. But its October data indicated a similar annual rate of price growth at 3.9 per cent.
Head of Mortgages at Halifax Amanda Bryden said after this survey that the expectation remains for house price increases for the rest of 2024 and into 2025 to be “modest”.
