Annual house price growth hits 10% in November – Nationwide

Annual house price growth saw a slight increase in November to 10.0%, according to the latest Nationwide House Price Index.

This rate of growth is slightly up from the 9.9% reported by Nationwide in October, after prices saw climbed on a monthly basis in November by 0.9%.

House prices are now almost 15% above the level prevailing in March last year, when the pandemic first struck the UK, with the average price now standing at £252,687.

Nationwide’s latest index suggested there had been “signs of cooling” in housing market activity in recent months, with the number of housing transactions down almost 30% year-on-year in October.

According to Nationwide chief economist, Robert Gardner, this is a trend that was “inevitable” given the expiry of the stamp duty holiday at the end of September, which gave buyers a strong incentive to bring forward their purchase to avoid additional tax.

“Activity has been extremely buoyant in 2021,” Gardner said. “The number of housing transactions so far this year has already exceeded the number recorded in 2020 with two months still to go and is actually tracking close to the number seen at the same stage in 2007, before the global financial crisis struck.

“Early indications also suggest that labour market conditions remain robust, despite the furlough scheme finishing at the end of September. If this is maintained, housing market conditions may remain fairly buoyant in the coming months, especially since the market has momentum and there is scope for ongoing shifts in housing preferences, as a result of the pandemic, to continue to support activity.”

However, Gardner also warned that the outlook for the the housing market still remains “uncertain”, with several factors suggesting the pace of activity may slow.

“It is unclear what impact the new ‘Omicron’ variant will have on the wider economy,” he added. “While consumer confidence stabilised in November, sentiment remains well below the levels seen during the summer, partly as a result of a sharp increase in the cost of living. Moreover, inflation is set to rise further, probably towards 5% in the coming quarters.

“Even if economic conditions continue to improve, rising interest rates may exert a cooling influence on the market. Indeed, house price growth has been outpacing income growth by a significant margin and, as a result, housing affordability is already less favourable than was the case before the pandemic struck.”

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