House prices see ‘surprise’ November jump as average value sits just 1% below | Personal Finance | Finance

House prices in the UK rose sharply in November, now just 1% below their record high, according to Nationwide. The building society reported a 1.2% month-on-month increase, the steepest rise since March 2022.

The annual growth rate of property prices rose to 3.7% in November, up from 2.4% in October, marking the fastest increase since the previous November. The average property value across the UK reached £268,144 for the month.

Nationwide’s chief economist, Robert Gardner, commented: “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 historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.”

Stamp duty is set to revert to its previous levels next spring. For first-time buyers in England and Northern Ireland, a temporary “nil rate” threshold will go back to £300,000, from the current level of £425,000.

However, Gardner noted: “The pick-up 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.”

Mr Gardner also highlighted the robustness of the housing market despite financial pressures, adding: “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.

“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.

“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.”

Providing the economy remains on the path of recovery, Mr Gardner concluded that the housing market’s underlying pace of activity is likely to strengthen gradually.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners said: “The decision not to extend the current relief on stamp duty thresholds beyond the end of March was a further blow for the market, though this is likely to lead to an uptick in house prices over the next four months as buyers race to secure a deal before the deadline to avoid a bigger tax bill.”

She suggested a cooler period may follow from April, adding: “Prices may be more muted from April, though the prospect of further interest rate cuts may support the market if affordability levels continue to improve.”

With a cautious air, Nicky Stevenson, managing director at Fine & Country, commented: “Rising inflation and living costs could prompt some buyers to pause plans and focus on savings. While activity is strong now, the true test of the market’s resilience will come in the new year.”

Iain McKenzie, CEO of the Guild of Property Professionals, observed: “We’ve seen before that changes to property taxation tend to create a surge in transactions before implementation, followed by a quieter period afterwards. We saw this pattern clearly during the pandemic stamp duty holiday.”

He recalled the pattern was especially evident during the pandemic stamp duty holiday.

Jeremy Leaf, a north London estate agent, shared insights from the front line: “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.”

“As a result, some pent-up demand was released and buyers are digging a little deeper. That extra choice, as well as broad acceptance that inflation and mortgage rates will not reduce as far and as fast as many expected, has meant caution still prevails.”

Matt Thompson, head of sales at Chestertons estate agents, commented: “With the current level of buyer activity expected to continue well into the new year, we predict London properties to hold their value or see a gradual value increase of up to 3% over the course of next year.”

From Hargreaves Lansdown, personal finance expert Sarah Coles said: “We might well see activity remain higher in the coming months, as buyers hurry to get in ahead of the end of the stamp duty holiday on March 31.”

She added: “However, as prices head to just 1% below their peak, and mortgage rates remain relatively high, there’s a growing chance that affordability raises its ugly head again. This could keep a lid on both sales and prices, as it just becomes too big a stretch to get onto the property ladder or move up it.”