‘Surprise’ house price jump in November as average values sit just 1% below peak

The annual price growth rate rebounded to 3.7% in November, from 2.4% in October, marking the fastest rise since November 2022.

Across the UK, the average house price in November was £268,144.

Robert Gardner, Nationwide’s chief economist, said: “House prices are just 1% below the all-time high recorded in the summer of 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.”

Stamp duty is set to revert to its previous levels next spring. For first-time buyers in England and Northern Ireland, a temporary “nil rate” threshold will go back to £300,000, from the current level of £425,000.

But Mr Gardner said: “The pick-up 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.

“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.

“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.”

Mr Gardner continued: “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.

“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.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager, said: “The decision not to extend the current relief on stamp duty thresholds beyond the end of March was a further blow for the market, though this is likely to lead to an uptick in house prices over the next four months as buyers race to secure a deal before the deadline to avoid a bigger tax bill.

“Prices may be more muted from April, though the prospect of further interest rate cuts may support the market if affordability levels continue to improve.”

Nicky Stevenson, managing director at estate agent group Fine &Country, said: “Rising inflation and living costs could prompt some buyers to pause plans and focus on savings. While activity is strong now, the true test of the market’s resilience will come in the new year.”

Iain McKenzie, chief executive of the Guild of Property Professionals, said: “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.”

Jeremy Leaf, a north London estate agent said: “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.”

Matt Thompson, head of sales at estate agent Chestertons, said: “With the current level of buyer activity expected to continue well into the new year, we predict London properties to hold their value or see a gradual value increase of up to 3% over the course of next year.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We might well see activity remain higher in the coming months, as buyers hurry to get in ahead of the end of the stamp duty holiday on March 31.

“However, as prices head to just 1% below their peak, and mortgage rates remain relatively high, there’s a growing chance that affordability raises its ugly head again. This could keep a lid on both sales and prices, as it just becomes too big a stretch to get onto the property ladder – or move up it.”