In a sign of resilience in the UK property market, British house prices in November posted their fastest annual rise since November 2022, according to data released by mortgage lender Nationwide on Monday. Despite higher borrowing costs, the housing market has shown unexpected strength, with annual prices climbing 3.7% last month and monthly prices rising by 1.2%. Both figures exceeded economists’ predictions, highlighting the sector’s continued robustness.
Housing Market Resilience Amid Economic Challenges
Nationwide’s Chief Economist, Robert Gardner, attributed the market’s enduring strength to sustained levels of activity, noting that the number of mortgage approvals has approached pre-pandemic levels. This is despite the Bank of England’s recent interest rate policies, which have kept borrowing costs elevated. However, Gardner expects further momentum in the housing market as affordability constraints ease, supported by gradual reductions in interest rates and wage growth outpacing house price increases.
“Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to strengthen gradually,” Gardner said.
This optimism is supported by additional data from the Bank of England, which last week reported the highest number of mortgage approvals for house purchases since August 2022. The central bank recently reduced borrowing costs for only the second time in four years and has indicated that future cuts will likely be gradual.
Government Initiatives to Boost Housing Supply
The Labour government, led by Prime Minister Keir Starmer since July, has also taken steps to address the country’s housing challenges. The government has pledged to reform the planning system to accelerate construction and has introduced mandatory targets to expedite house-building. However, the persistent shortage of housing supply remains a key driver of rising prices and is expected to continue influencing the market in the medium term.
Outlook for the UK Housing Market
While affordability remains a concern for many prospective buyers, the combination of modestly lower interest rates and increasing earnings could provide relief in the coming months. Gardner anticipates gradual strengthening in the housing market as economic conditions improve.
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