The UK housing market has experienced a significant surge in property prices, with values climbing by 3.7% in the year to November to £268,144, according to the Nationwide house price index. This marks the fastest rise since November 2022 when there was a 4.4% increase.
Key Statistics:
- Annual growth: 3.7%
- Current value: £268,144
- Previous high: 1% below all-time high recorded in summer 2022
The month of November alone saw house prices rise by 1.2% compared to October, the largest monthly increase since March 2022.
Nationwide’s Analysis:
"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," said Nationwide chief economist Robert Gardner.
He added, "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."
Stamp Duty Changes:
From April 2025, second-home buyers will face a stamp duty rate rise of two percentage points – from 3% to 5%. This change is likely to bring purchases forward early next year as buyers seek to avoid paying extra tax.
Expert Opinions:
- Jeremy Leaf, North London Estate Agent: "In our offices, we are seeing prices hardening and stock levels rising, partly because the budget, though not particularly helpful, was not as bad as many feared either."
- Nathan Emerson, Chief Executive of Propertymark: "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."
Market Activity:
Figures from the Bank of England last week showed lenders approved the most mortgages for house purchases since August 2022. This surge in mortgage approvals is likely to continue, 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.
Industry Insights:
- Verona Frankish, Chief Executive of Yopa: "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."
- Ruth Gregory, Deputy Chief UK Economist at Capital Economics: "Buyers were shrugging off higher mortgage rates. November’s surprisingly large rise in the Nationwide house price index suggests the housing market is picking up momentum despite recent rises in mortgage rates."
The resilience of the housing market supports forecasts that house prices will rise by an above-consensus 3.5% next year.
Conclusion:
The UK housing market has experienced a significant surge in property prices, with values climbing by 3.7% in the year to November. This marks the fastest rise since November 2022, and the month of November alone saw house prices rise by 1.2% compared to October. The acceleration in house price growth is surprising, given affordability remains stretched by historic standards. However, the resilience of the housing market supports forecasts that house prices will rise by an above-consensus 3.5% next year.
Recommendations:
- Buyers: Consider purchasing a property before the upcoming Stamp Duty rises due to commence from April 2025.
- Sellers: Expect increased competition in the market as buyers rush to complete purchases before the stamp duty increase.
- Investors: Monitor the housing market closely, as forecasts suggest house prices will continue to rise in the coming year.
Sources:
- Nationwide House Price Index
- Bank of England
- Propertymark
- Yopa
- Capital Economics