Annual house price growth in the UK decelerated to 4.4% in November, falling from 7.2% in October, according to the latest Nationwide House Price Index.

Average UK house prices also fell by 1.4% on a month-by-month basis, which was the biggest fall since June 2020.

This followed a 0.9% drop in prices October, as the housing market first started to respond to the fallout from the government’s mini-Budget announced in September. These latest changes leave the average UK house price at £263,788, dropping from £268,282 in October.

Nationwide chief economist, Robert Gardner, said that while financial market conditions have stabilised, interest rates for new mortgages remain elevated and that the market has “lost a significant degree of momentum”.

“Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation,” Gardner commented.

“The market looks set to remain subdued in the coming quarters. Inflation is set to remain high for some time and bank rate is likely to rise further as the Bank of England (BoE) seeks to ensure demand in the economy slows to relieve domestic price pressures.

“The outlook is uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible.”

Gardner also stated that longer-term borrowing costs have fallen back in recent weeks and “may moderate further”, if investors continue to revise down their expectations for the future path of the BoE’s base rate.

“Given the weak growth outlook, labour market conditions are likely to soften, but they are starting from a robust position with unemployment still near 50-year lows,” he added.

“Moreover, household balance sheets remain in good shape with significant protection from higher borrowing costs, at least for a period, with around 85% of mortgage balances on fixed interest rates. Stretched housing affordability is also a reflection of underlying supply constraints, which should provide some support for prices.”

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