UK house prices shot up in November at the fastest pace in two years. The news took analysts by surprise, coming at a time when near-record highs have strained affordability.
If you are property investment planning in Cheshire, the annual national growth rate was 3.7% in November, which was up from 2.4% in October. Earlier data from the Office of National Statistics showed that average property prices went up to £292,000 – an increase of 2.9% in the year ending September 2024.
Commentators have been speculating about what is driving this acceleration and what is currently sustaining demand. Previously, in 2022, demand was driven by a post-pandemic rush for homes at a time when interest rates were historically low. However, since then, conditions for mortgage borrowers haven’t been benign, given the subsequent rise in interest rates to head off inflation.
Some economists have suggested that while affordability has been stretched relative to average incomes and higher interest rates, the housing market has remained resilient due to a strong labour market, low unemployment and increases in pay. Household debt is also at its lowest level relative to income since the mid-2000s.
While some commentators doubt this trend can be sustained, a further drop in interest rates by mortgage lenders could help sustain momentum in 2025.
It is not believed the figures would have been impacted by the Budget, as most mortgage applications pre-dated it. With increases to stamp duty due next spring, however, the market could see a spike as second-home investors attempt to beat the deadline.
