The average house price increased by 1.2% month-on-month in November, according to the latest House Price Index from Nationwide.
The average non-seasonally adjusted price grew to £268,144, up from £265,738 in October of this year.
The annual growth rate rebounded to 3.7%, from 2.4% in October – fastest since November 2022.
The data revealed that house prices are now just 1% below their all-time peak in summer 2022.
Robert Gardner, Nationwide’s chief economist, said: “House prices increased by a robust 1.2% 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.
“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.”
He added: “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.
“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.”
Gardner concluded: “But, providing the economy continues to recover steadily, as we expect, 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.”
Reaction:
Amy Reynolds, head of sales at Antony Roberts:
“Further increases in average house prices come as a surprise, considering the affordability challenges and reduced demand in some regions.
“Those areas with limited stock, such as the Richmond Borough, are seeing prices hold firm.
“Homes that are well priced and well presented are still selling relatively quickly; while buyers may pause to assess financial implications, high-demand areas are likely to retain interest.”
Mark Harris, chief executive at SPF Private Clients:
“Inflation creeping back up is not the required backdrop for aggressive rate cuts, and with the Budget expected to fuel inflation further, this may slow down activity in the market as hard-pressed borrowers who are struggling with affordability wait for rates to come down further.
“Swap rates have slipped back in the past few days but most lenders are still repricing upwards.”
Daniel Austin, CEO and co-founder at ASK Partners:
“We continue to see a month-on-month rise in house prices, which is hopefully the sign of an upward trend developing for the remainder of the year going into 2025.
“The market certainly appears to be showing signs of resilience.
“The market is feeling buoyant following the Autumn Budget with £5bn promised for new homes and the Government’s permanent establishment of the mortgage guarantee scheme, which supports lenders offering 95% loan-to-value [LTV] mortgages.
“Increased supply should continue to support the market and level out values; a plus for first time buyers, who conversely will be hit by the new lower Stamp Duty thresholds.
“In the property investment world, rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential.
“Incentives announced in the Budget to support the Build-to-Rent sector, including £3bn in housing guarantee schemes that provide lower-cost loans should entice developers.
“While private investors will be hit by Higher Rate for Additional Dwellings, SME housebuilders will benefit from the Affordable Homes Programme and funding to unlock stalled developments, all contributing to increased supply.
“Sustained house price growth, lower interest rates and dampened inflation alongside new initiatives to benefit developers, should continue to stimulate market growth.
“As a debt provider we will be pleased to see more favourable market conditions unlocking strong assets in good locations for well-capitalised borrowers.”
Jeremy Leaf, North London estate agent and former RICS residential chairman:
“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.
“Transaction lengths are extending too, particularly bearing in mind the seasonal distractions so sellers still need to be extra competitive to attract serious attention at this time of year.”
Guy Gittins, CEO at Foxtons:
“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.
“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.
“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.”
Verona Frankish, CEO 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.
“As a result, we can expect a very busy end to 2024 and it’s likely that both mortgage approval levels and house prices will trend upwards as the year comes to a close.”
Marc von Grundherr, director of Benham and Reeves:
“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.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“The property market looks set for an interesting few months, with changes to Stamp Duty threatening to create a rush of activity in early 2025.
“Few were expecting such a strong rebound in annual house price increases, especially due to the significant challenges in the economy for many consumers.
“However, 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.
“This artificial deadline could create a frenzy of activity at the start of the year, as buyers race to complete before the changes take effect.
“However, this short-term boost is likely to be followed by a natural cooling-off period as the market rebalances.
“The underlying fundamentals of the market remain strong though, with the prospect of lower interest rates and wage growth both set to improve affordability as we move through 2025.”
Tomer Aboody, director at MT Finance:
“Another month of house price growth further indicates the level of confidence in the market which has been evident since the reduction and stability in both mortgage rates and inflation.
“Both sellers and buyers are pushing to transact, as affordability is improving.
“While the Budget is now behind us, its full impact has yet to be felt.
“However, we are hopeful that this confidence in the market continues, with further rate cuts expected in the new year.”
Jonathan Hopper, CEO of Garrington Property Finders:
“The property market has blown through its pre-Budget wobble to end the year on a roll.
“With both average prices and activity rising, and the Bank of England cutting its Base Rate again, the mood in November was more upbeat than the anxious and halting sentiment seen in October.
“Even though many mortgage lenders have yet to pass on the latest Base Rate cut to new borrowers, some would-be buyers are being spurred into action by the realisation that cheaper mortgages are on their way.
“We’re also seeing the first signs of another ‘Stamp Duty stampede’ as many first-time buyers race to complete their purchases before the Stamp Duty thresholds change at the end of March.
“But the buoyancy at the lower end of the market, in which some first-time buyers are viewing in haste and offering high in order to secure a home before the tax changes take effect, is not universal.
“It’s a very different story higher up the market, where wealthy buyers are licking their wounds from the Budget and sentiment is settling only gradually.
“With plenty of supply of prime homes for sale, buyers at this end of the market are likely to find themselves spoilt for choice and able to negotiate hard on the price they pay – and this is holding price inflation firmly in check.”
