Annual house price growth climbs to 6.5% in November

Annual house price growth increased to 6.5% during November, the highest rate of growth since January 2015, according to new data from Nationwide.

The latest Nationwide House Price Index showed that house prices were up by 0.9% month-on-month in November, after taking account of seasonal effects, which followed a 0.8% rise in October.

The society revealed that the latest increase has brought the average UK house price to £229,721.

Nationwide chief economist, Robert Gardner, said the data indicates that the economic recovery had “lost momentum”, even before the latest lockdown came into effect

“Economic growth slowed sharply from 6.3% in the month of July to 2.2% in August and 1.1% in September, even though the economy was still around 8% smaller than its pre-pandemic level at that point,” he commented. “Rising infection rates and tighter social restrictions will have resulted in a further hit to growth in October and November.

“Labour market conditions also weakened with the unemployment rate rising to 4.8% in the three months to September – still low by historic standards, but up from an average of 3.8% in 2019. The extension of the furlough scheme to March 2021 will help limit job losses in the short-term by enabling firms to retain more staff than they would have done otherwise.”

Gardner also suggested that housing market activity, despite the pandemic’s impact on the economy, has remained “robust” but warned the outlook for the market is still “highly uncertain”.

“Despite these headwinds, housing market activity has remained robust,” he said. “October saw property transactions rise to 105,600, the highest level since 2016, while mortgage approvals for house purchase in the same month were at their highest level since 2007 at 97,500.

“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of COVID-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near-term boost by bringing purchases forward.

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

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