UK house price growth back in double digits in November

House price growth returned to double digits in November with a rise of 10% compared with the same month last year and slightly above the 9.9% increase seen in October, according to the Nationwide House Price Index.

Prices rose 0.9% month-on-month and house prices are now 15% above their level in March 2020, when the COVID-19 pandemic struck.

There have been signs recently that the housing market may be cooling, with housing transactions falling nearly 30% year-on-year in October following the end of the Stamp Duty holiday.

But Nationwide said activity has been “extremely buoyant” in 2021, with housing transactions so far this year already exceeding 2020 numbers.

“Moreover, underlying activity appears to be holding up well. The number of mortgages approved for house purchases in October was still running above the 2019 monthly average,” said Robert Gardner, Nationwide’s chief economist.

“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.”

However, the emergence of the new Omicron variant of coronavirus, lower consumer confidence, inflation and rising interest rates mean the outlook remains uncertain, he cautioned.

“Even if economic conditions continue to improve, rising interest rates may exert a cooling influence on the market. Indeed, house price growth has been outpacing income growth by a significant margin and, as a result, housing affordability is already less favourable than was the case before the pandemic struck,” Gardner said.