UK house prices rose an average of 0.2 per cent month on month in November - prompting the Nationwide to call it a ‘housing market recovery’.
Annual growth remains weak but the strongest since February with house prices now down only 2.0 per cent compared with a year ago.
Commenting on the figures, Robert Gardner, Nationwide's chief economist, says: “This was the third successive monthly increase and resulted in an improvement in the annual rate of house price growth from down 3.3 per cent in October, to down 2.0 per cent.
“While this remains weak, it is the strongest outturn for nine months.
“There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity.
“In mid-August, investors had expected the Bank of England to raise rates to a peak of around 6.0 per cent and lower them only modestly over the next five years. By the end of November, this had shifted to a view that rates have now peaked (at 5.25 per cent) and that they will be lowered to around 3.5 per cent in the years ahead.
“These shifts are important as they have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing, as shown below.
“If sustained, this will help to ease the affordability pressures that have been stifling housing market activity in recent quarters, where the number of mortgage approvals for house purchases has been running at circa 30 per cent below pre-pandemic levels.”
However Gardner cautions that a rapid rebound still appears unlikely.
“Cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, but consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries” he notes.
Policymakers have cautioned that it is too early to be talking about interest rate cuts.
Three of the nine members of the Bank of England’s Monetary Policy Committee voted to increase Bank Rate at its meeting in early November, though the remaining six preferred to hold at 5.25 per cent for the time being.
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