UK house prices experienced their fastest annual growth in nearly two years this November, climbing 3.7%, up from 2.4% in October, according to figures from Nationwide. This unexpected surge pushed the average house price to £268,144, just 1% shy of its all-time high, despite ongoing affordability challenges.
This marks the highest growth rate since November 2022 and comes amid rising mortgage costs, fueled by central banks’ efforts to combat inflation through higher interest rates. Robert Gardner, Nationwide’s chief economist, noted the paradox: “The acceleration in house price growth is surprising, given stretched affordability due to high house prices relative to incomes and elevated interest rates.”
The resilience in the housing market is attributed to robust labor market conditions. Low unemployment and real income growth have bolstered buyer confidence, Gardner explained. Furthermore, household debt levels relative to income are at their lowest since the mid-2000s, which has contributed to sustained activity.
November also saw a 1.2% rise in house prices compared to October, marking the largest monthly increase since March 2022. Mortgage approvals have been approaching pre-pandemic levels, indicating steady demand despite financial pressures.
Ruth Gregory, deputy chief UK economist at Capital Economics, expressed skepticism about the market’s ability to sustain this momentum, citing persistent affordability challenges. However, she anticipates that falling mortgage interest rates could support activity in the coming year.
Nationwide said the figures were not significantly influenced by Labour’s first budget in October, which introduced higher stamp duty for second-home buyers effective April 2025. This may prompt a short-term boost in transactions as buyers rush to complete purchases before the deadline, potentially leading to a slowdown in activity afterward.
The unexpected rebound underscores the complex dynamics of the UK housing market, with resilient demand defying financial headwinds.
