An estate agent’s “SOLD” sign appears outside a row of townhouses in Guildford, southern England, on August 6, 2024.
Justin Tallis | AFP | Getty Images
UK house prices rose at the fastest pace since November 2022 in November, according to data from mortgage lender Nationwide on Monday, underlining the housing sector’s signs of recovery despite higher borrowing costs.
Nationwide said prices rose at an annual rate of 3.7% in November and a quarterly increase of 1.2%. Both the annual and monthly increases were higher than economists forecast in a Reuters poll.
Nationwide chief economist Robert Gardner said: “Despite the higher interest rate environment, housing market activity has remained relatively resilient in recent months, with mortgage approvals approaching pre-pandemic levels.”
Other indicators of the UK housing market are also showing momentum. Bank of England data last week showed lenders approved the largest number of home purchase mortgages since August 2022.
The Bank of England last month cut borrowing costs for the second time in four years and said future rate cuts were likely to be gradual.
Gardner expects the housing market to continue to strengthen in the coming months.
“If the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to gradually strengthen as interest rates are moderately lowered and earnings growth outpaces house price growth and affordability constraints are eased,” he said.
Prime Minister Keir Starmer’s Labor government, which came to power in July, has pledged to reform the planning system to allow more building.
It also sets mandatory targets for speeding up housing construction, although a shortage of housing supply is likely to remain a factor pushing up house prices in the medium term.
