House prices continue to rise during November

Despite signs of housing market activity cooling in recent months, figures released today show that annual house price growth increased in November to 10.0%.

The figures, released in the November Nationwide House Price Index, reveal that the average house now costs £252,687, an 0.9% increase month-on-month.

“Annual house price growth remained strong in November at 10.0%, marginally higher than the 9.9% recorded in October,” explained Robert Gardner, chief economist at Nationwide. “Prices rose 0.9% in month-on-month terms, after taking account of seasonal effects. As a result, house prices are now almost 15% above the level prevailing in March last year when the pandemic struck the UK.

“There have been some signs of cooling in housing market activity in recent months. For example, the number of housing transactions were down almost 30% year-on-year in October. But this was almost inevitable, given the expiry of the Stamp Duty holiday at the end of September, which gave buyers a strong incentive to bring forward their purchase to avoid additional tax.

“Indeed, 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.

“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. 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.

“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.”

Although rising house prices will make it harder for those hoping to get onto the property ladder, there is some good news for first-time buyers as mortgage rates for those with a 10% deposit have fallen over the past few months.

The average rate on a two-year fixed mortgage for those with a 10% deposit stood at 2.56% at the start of October, this fell to 2.54% on 1 November and today stands at 2.51%.

Meanwhile, the average rate on a five-year fixed mortgage needing a 10% deposit has also fallen over the last three months, standing at 3.05% in October, falling to 3.02% in November and falling again to now stand at 2.95%.

First-time buyers looking for a mortgage deal will find even lower rates available in our first-time buyer charts.

For example, the lowest rate on a two-year fixed deal requiring a 10% deposit and which is available to those located in all areas of Great Britain is a deal from Halifax offering 1.64% (3.3% APRC) fixed until 29 February 2024 and then reverts to 3.59%.

The lowest rate on the equivalent five-year fixed deal comes from Digital Mortgages by Atom Bank which offers 2.34% (3.2% APRC) fixed until 28 February 2027 and then reverts to 3.50%.

When looking at mortgage deals, first-time buyers should consider speaking to a mortgage broker who will be able to look at all aspects of deals available, including associated fees and incentives, to advise the best options for their personal circumstances.