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UK house prices rose at their fastest pace in nearly two years in November, in a surprising acceleration despite near-record highs weighing on affordability, according to data from Nationwide.
The annual growth rate rebounded to 3.7% in November from 2.4% in October, according to the UK’s biggest construction company. That was the fastest pace since November 2022.
The surge in prices lifted the average cost of purchases across Nationwide to £268,144, just 1% below the record. Nationwide’s data is more recent but less complete than that of the Office for National Statistics, which found that average UK house prices rose by 2.9% to £292,000 in the year to September 2024 .
This record was reached in summer of 2022when the post-Covid lockdown housing rush combines with historically low interest rates. however conditions for borrowers have worsened significantly since then as central banks raised interest rates sharply to fight inflation – leaving a puzzle as to how housing demand is sustained.
Robert Gardner, Nationwide’s chief economist, said: “The acceleration in house price growth is surprising as affordability remains tight by historical standards, with house prices still high relative to median incomes and interest rates well above pre-Covid levels.
“Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching pre-pandemic levels despite the higher interest rate environment.”
Gardner added: “Solid labor market conditions, p low unemployment rates and strong income gains, even after accounting for inflation, have helped to keep activity and home prices up steadily since the start of the year.”
Household debt levels are at their lowest relative to household income since the mid-2000s, Gardner said.
Prices rose a steady 1.2% in November compared with October, after adjusting for seasonal effects. This was the biggest monthly gain since March 2022.
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Ruth Gregory, deputy chief UK economist at Capital Economics, a consultancy, said she doubted the strength would be sustained as the price-to-income ratio was “still stretched by past standards”. However, she added that she expected a drop in interest rates offered by mortgage lenders, which would help sustain activity next year.
Nationwide said the figures were not thought to have been significantly affected by Labour’s first budget, as most mortgage applications had started before it took place on October 30. Chancellor Rachel Reeves made limited changes to stamp duty, raising tax on the purchase of a second home since April.
Budget changes can mean higher number of transactions until the end of March as second home buyers look to beat the deadline. This may be followed by lower numbers for several months.
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