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UK house prices rose slightly faster than expected in November ahead of finance minister Rachel Reeves’ budget, with stronger wage growth offering some relief to stretched buyers, according to data from mortgage lender Nationwide on Tuesday.
On a seasonally adjusted basis, house prices increased 0.3% in November, following a 0.2% gain in October, taking the average price to £272,998 ($360,739.56). Annual price growth, however, slowed to 1.8% from 2.4% the previous month.
Economists polled by Reuters had expected a more modest 0.1% monthly rise and 1.4% year-on-year growth.
Fresh Bank of England figures released on Monday showed October mortgage approvals came in higher than anticipated, signaling a tentative pickup in housing demand.
The BoE is widely expected to cut its key interest rate from 4% to 3.75% in December, a move that could provide further support to the housing market by easing borrowing costs.
“Looking forward, housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect,” said Robert Gardner, Nationwide’s Chief Economist. “Borrowing costs are also likely to moderate a little further if Bank Rate is lowered again in the coming quarters.”
Even so, some recent property indicators have pointed to cooling momentum, with analysts citing buyer caution in the run-up to Reeves’ November 26 tax-and-spend plan.
Gardner added that a new tax on expensive homes, announced by Reeves last week, was unlikely to significantly affect the broader housing market but could dampen the supply of new rental properties, as some landlords may be discouraged from further investment.
