UK House Prices Rebound in November

House prices in the UK rebounded in November, rising 1.2% from a month earlier, according to a report by Nationwide Building Society (LON:NBS) on Monday. The annual growth rate increased to 3.7%, up from 2.4% in October, marking the fastest pace since November 2022. House prices are now just 1% below their all-time peak, the report noted.

Insights from Nationwide's Chief Economist

Nationwide's Chief Economist, Robert Gardner, commented on the figures, highlighting the robust rebound in the annual growth rate. He emphasized that the 3.7% increase in the price of a typical UK home year-on-year is the fastest for a two-year period. Gardner expressed surprise at the acceleration in house price growth, given the stretched affordability amid high house prices relative to average incomes and interest rates exceeding pre-pandemic levels.

Market Activity Remains Strong

Gardner reported that housing market activity has remained strong, with mortgage approvals nearing pre-pandemic levels despite higher interest rates. He linked the steady rise in activity and house prices since the start of the year to solid labor market conditions, low unemployment, increasing income levels, and household debt at its lowest in relation to income since the mid-2000s.

Future Expectations

Gardner noted that upcoming stamp duty changes are unlikely to have significantly driven the recent price growth, as most mortgage applications began before the Budget announcement. However, he anticipates these changes may encourage buyers to complete purchases prior to additional taxes, likely resulting in a surge in transactions in the first quarter of 2025, especially in March, followed by a weaker market period.

If the economy continues to recover steadily, Gardner expects the underlying pace of housing market activity to gradually strengthen, supported by modestly lower interest rates and earnings growth outpacing house price increases.

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