House price recovery continued in November – Nationwide 

UK house prices rose by 0.2% month-on-month in November, according to figures from mortgage lender the Nationwide. This is the third successive monthly rise seen by the building society’s house price index, reflecting a shift in interest rate expectations. 

Robert Gardner, Nationwide’s chief economist, said: “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.” 

According to the figures, while house prices are down by 2% compared with a year ago, annual growth is at its strongest since Feb 2023. 

Mr Gardener said that investors had expected interest rates to reach around 6%. But by last month this view had shifted, with investors believing that rates had already peaked at 5.25% and will be lowered to 3.5% 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,” he said. 

“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 around 30% below pre-pandemic levels. 

“While mortgage rates are unlikely to return to the lows prevailing in the aftermath of the pandemic, modestly lower borrowing costs, together with solid rates of income growth and weak/negative house price growth, should help underpin a modest rise in activity in the quarters ahead,” he said. 

However, he added that while the cost of living is easing, and inflation is declining, pressures on household incomes remain. 

Read more about this story on the Nationwide website.