UK house prices increased for the third consecutive month in November. Want to know more about what’s happening in the property market? Read on…
House prices rose by 0.2% in November, which was the third consecutive monthly increase, according to the latest Nationwide House Price Index. October’s House Price Index from the lender showed an increase of 0.9%. The average house price stood at £258,557 in November.
Nationwide described it as ‘the UK’s house price recovery’. Economists had expected a 0.4% monthly fall in prices. However, house prices are still 2% lower than in November 2022.
Nationwide’s chief economist Robert Gardner says: ‘UK house prices rose by 0.2% in November, after taking account of seasonal effects. This was the third successive monthly increase and resulted in an improvement in the annual rate of house price growth from -3.3% in October to -2.0%. While this remains weak, it is the strongest outturn for nine months.’
Property market expectations
Nationwide also highlighted an interesting trend in market expectations for the future path of the base rate, which could boost housing market activity.
Previously, investors anticipated that the Bank of England would raise the base rate to around 6% and only slightly lower it to approximately 4% over the next five years.
This view has recently changed, suggesting that the rate may have peaked at its current level of 5.25% for the time being. It is predicted that it will be gradually lowered to around 3.5% in the coming years.
Too early for too much optimism
However, it is too soon to be overly optimistic. Nationwide is keen to point out that three of the nine Bank of England’s Monetary Policy Committee members voted to increase the base rate at its meeting in early November. Fortunately for homebuyers, they were outvoted.
The base rate remaining at the same level in November has resulted in a decrease in mortgage interest rates. If this trend continues, it will help alleviate affordability pressures that have hindered the housing market this year.
While mortgage rates may not return to the extremely low levels seen right after the pandemic, slightly lower borrowing costs, along with income growth and slight house price growth, should contribute to a modest increase in activity.
Overall, the recent increase in house prices and the potential for improved market conditions provide hope for homeowners and the housing market. We may see some stability in the property market.