The growth of house prices accelerated last month and the market was holding up despite the end of pandemic emergency support measures for housing and the broader economy, mortgage lender Nationwide said in its latest report.
House prices rose by 0.9% in November compared with October when they rose by 0.7%, Nationwide said.
The increase left house prices 10% higher than in November 2020, above a median forecast of 9.3% in the Reuters poll.
Nationwide chief economist Robert Gardner said house prices were now almost 15% above their level in March 2020 when the pandemic swept the UK.
“Underlying activity appears to be holding up well,” Gardner said.
“The number of mortgages approved for house purchases in October was still running above the 2019 monthly average. Early indications also suggest that labour market conditions remain robust, despite the furlough scheme finishing at the end of September. If this is maintained, housing market conditions may remain fairly buoyant in the coming months, especially since the market has momentum and there is scope for ongoing shifts in housing preferences, as a result of the pandemic, to continue to support activity.
“But the outlook remains uncertain, where a number of factors suggest the pace of activity may slow. It is unclear what impact the new ‘Omicron’ variant will have on the wider economy. While consumer confidence stabilised in November, sentiment remains well below the levels seen during the summer, partly as a result of a sharp increase in the cost of living. Moreover, inflation is set to rise further, probably towards 5% in the coming quarters.
Rob Peters, director of Altrincham-based Simple Fast Mortgage, said:
“The shorter days and colder nights, combined with potential buyers’ minds moving to more festive thoughts, put the coolers on new buying activity in November but the abject lack of stock clearly supported prices.
“It’s now widely expected the Bank of England will increase interest rates imminently, with markets expecting a rise to 0.25% to be announced in December.
“As such, the majority of mortgage lenders have already factored a rise into their own pricing, and therefore mortgage interest rates have increased slightly in anticipation.
“Given the historically cheap finance we have at present, we don’t expect a minor increase in interest rates to create an issue for most borrowers. That said, those that have highly leveraged strategies where borrowing is high, disposable income low, or those that have a less stable income, may feel the pinch more as they could find they are left with less cash at the end of the month.”