Cooling year-on-year growth and modest monthly rise point to stable but subdued conditions
Annual UK house price growth eased to 1.8% in November, down from 2.4% in October, signalling a further slowdown in year-on-year gains.
Prices still climbed 0.3% to £272,998 over the month, indicating that values are edging higher even as the pace of annual growth moderates.
The figures, drawn from Nationwide’s latest House Price Index, suggest a market that is broadly steady but lacking strong momentum, with demand constrained by higher mortgage rates and stretched affordability.
“The housing market has remained fairly stable in recent months, with house prices rising at a modest pace and the number of mortgages approved for house purchase maintained at similar levels to those prevailing before the pandemic,” said Robert Gardner (pictured right), chief economist at Nationwide.
“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before COVID struck and house prices are close to all-time highs.
For Karen Noye, mortgage expert at wealth manager Quilter, the easing in annual price growth is consistent with a market that has been on pause, with buyers and sellers influenced by both policy and rate expectations.
“Nationwide HPI shows house prices rose by around 0.3% this month, but left annual growth slightly lower at 1.8%,” Noye noted. “This reflects a market that has been treading water.
“Most of November was dominated by budget rumours and many buyers simply waited to see what the Chancellor would do. The confirmation of a mansion tax will matter most to the top end, but the speculation alone about what might have appeared in the Budget had already stalled decisions.”
Noye added that with the budget out of the way, the focus now shifts back to interest rates. “The removal of Budget uncertainty helps, but buyers will only return in greater numbers if mortgage rates continue to drift down,” she said. “If inflation keeps falling and lenders sharpen pricing further, we could see activity pick up in the new year, but a rapid rebound is unlikely.”
Gardner, meanwhile, believes that the changes to property taxes announced in the Budget are unlikely to have a significant impact on the housing market.
“The high value council tax surcharge, which is not being introduced until April 2028, will apply to less than 1% of properties in England and around 3% in London,” he pointed out. “The increase in taxes on income from properties may dampen the supply of new rental properties coming onto the market. Rental supply has been constrained for some time, with the potential for this to maintain upward pressure on rental growth, which has been running at all-time highs in recent years.
“Looking forward, housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect. Borrowing costs are also likely to moderate a little further if bank rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong. Indeed, in aggregate, the ratio of household debt to disposable income is at its lowest for two decades.”
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