House prices rose by 3.7% in the year to November, up from 2.4% annual growth in October – the fastest rate of growth since November 2022.
Month-on-month, seasonally adjusted house prices increased by 1.2% – the largest monthly gain since March 2022 – to reach an average price of £268,144, according to Nationwide’s November House Price Index.
House prices are now 1% below their all-time peak recorded in the summer of 2022.
‘Surprising’ acceleration in house prices
Robert Gardner, Nationwide’s chief economist, said: “The acceleration in house price growth is surprising, since affordability remains stretched by historic[al] standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.
“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. Household balance sheets are also in good shape, with debt levels at their lowest levels relative to household income since the mid-2000s.”
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Gardner added that housing market activity had remained “relatively resilient in recent months”, with the number of mortgage approvals approaching the levels seen pre-pandemic despite the higher interest rate environment.
Mortgage approvals for house purchases totalled 68,300 in October, the highest level since August 2022, when this reached 72,200, according to the Bank of England’s Money and Credit report.
Gardner said the pick-up in price growth was unlikely to have been driven by upcoming stamp duty changes, as the majority of mortgage applications were submitted before the Budget announcement.
From 1 April, first-time buyers and movers will see the thresholds at which they begin paying stamp duty fall back to 2022 levels.
Spike in transactions expected in 2025
The stamp duty changes are expected to provide an incentive for buyers to bring forward their purchases, causing a spike in transactions in the first three months of 2025, particularly in March.
According to Gardner, this is likely to lead to a period of weaker market activity in the following 3-6 months.
“This has the potential to shift the demand and supply balance in the near term and impact price movements,” he added.
Economist group Capital Economics said it doubted the strong growth seen in November would be sustained due to ongoing affordability pressures, but the housing market’s resilience supported its forecast that house prices would rise by an above-consensus 3.5% next year.
