02 December 2024
If you are covering the latest Nationwide House Price Index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
"Nationwide’s latest House Price Index reveals a surprising surge in UK house prices, with annual growth rebounding to 3.7% in November, up from 2.4% in October. This marks the fastest annual growth rate in two years and pushes house prices to just 1% below their all-time peak. On a monthly basis, prices rose by a robust 1.2%—the largest gain since March 2022—defying expectations in what remains a challenging affordability environment.
"Despite the rebound, affordability pressures persist, with house prices still high relative to incomes and interest rates well above their pre-pandemic levels. For first-time buyers, this means higher monthly payments and stretched budgets, underlining the difficult balancing act between rising prices and the cost of borrowing. However, the housing market continues to show resilience, supported by low unemployment, rising real incomes, and healthier household balance sheets.
"The rebound in price growth doesn’t appear to have been influenced by the recent Budget changes to stamp duty, as most mortgage applications would have been started before the announcements. However, the prospect of higher stamp duty for some buyers from March 2025 is likely to create a rush to complete purchases early next year. This could create volatility, with a spike in transactions in the short term followed by a potential slowdown later in 2025, as buyers adjust to the new landscape.
“The housing market’s resilience also reflects broader structural issues. With demand outstripping supply and the government falling well short of its target to build 300,000 homes annually, prices are likely to remain under pressure even as affordability constraints persist. This dynamic, combined with limited rental supply due to higher costs for landlords, is creating a tough environment for those trying to enter the market.”
