House prices rose in November for the third month in a row, but are still lower than a year ago.
The latest House Price Index from Nationwide shows that average prices across the UK were 0.2% higher last month, building on the 0.9% increase seen in October. As a result, the average cost of a home now stands at £258,557.
Prices were 2% down on an annual basis, but the rolling 12-month measure was the strongest recorded since February.
It comes after the Bank of England paused interest rate hikes at 5.25%.
“There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity,” said Nationwide’s chief economist Robert Gardner.
“In mid-August, investors had expected the Bank of England to raise rates to a peak of around 6% and lower them only modestly (to c.4%) over the next five years. By the end of November, this had shifted to a view that rates have now peaked (at 5.25%) and that they will be lowered to around 3.5% in the years ahead.”
These shifts have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing, Gardner explained.
“If sustained, this will help to ease the affordability pressures that have been stifling housing market activity in recent quarters, where the number of mortgage approvals for house purchases has been running at c.30% below pre-pandemic levels.”
Gardner added that modestly lower borrowing costs, together with income growth and weak/negative house price growth, should help underpin a rise in activity in the coming months. However, a rapid rebound is unlikely as consumer confidence remains weak and surveyors are continuing to report subdued levels of enquiries from new buyers.
