House prices have jumped by 10 per cent in the year to November according to an index.
The average UK house cost 0.9 per cent more on average in November than it did the month before whilst year on year growth soared by 10 per cent. Buyers dished out an average of £252,687 to snap up a new home according to data from Nationwide, which publishes a monthly house price index.
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “house prices are now almost 15 per cent above the level prevailing in March last year when the pandemic struck the UK.
“Activity has been extremely buoyant in 2021. The number of housing transactions so far this year has already exceeded the number recorded in 2020 with two months still to go and is actually tracking close to the number seen at the same stage in 2007, before the global financial crisis struck.”
The red hot housing market has experienced a cooling in the past two months after the Stamp Duty holiday came to an end at the end of September, which gave buyers a strong incentive to bring forwards purchases to avoid tax. As a result transactions were down by 30 per cent year-on-year in October.
Looking ahead, Gardner said “the outlook remains uncertain.”
“It is unclear what impact the new ‘Omicron’ variant will have on the wider economy,” he continued. “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 per cent in the coming quarters.”
Tom Bill, head of UK residential research at Knight Frank, said the market had “powered its way through the end of both the stamp duty holiday and the furlough scheme.”
He added: “Gravity-defying price growth is the result of low interest rates and tight supply, which are both things we expect to reverse next year, putting downwards pressure on prices. Interest rates may rise more slowly if the new Omicron Covid-19 variant proves to be more serious than the early anecdotal evidence suggests while any impact on supply and demand will depend on how it compares to previous variants.”
House price analysis
“The stamp duty holiday, low interest rates, a lack of stock and a strong desire to move created the perfect storm, pushing up property prices,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.
“‘The noise around interest rate rises is likely to get louder as we head into the new year but for now it’s a mixed bag when it comes to mortgage pricing, with the cost of sub-80 per cent loan-to-value mortgages still rising while higher LTV products are seeing some reductions,” Harris continued.
Guy Gittins, the chief executive of Chestertons, said: “November saw a slight drop in finalised sales. This is an expected side effect following house hunters prioritising their first summer holiday since lockdown in August and September, which automatically led to fewer viewings during this time.
“As the market witnessed a great deal of appetite from house hunters right after the summer holidays – particularly during October – we are expecting the number of agreed sales to remain high for the rest of the year and into Q1 2022,” he added.