There’s been an upbeat reaction to the latest house price index, which shows a monthly rise for November – despite Budget speculation – while annual growth has dipped.
The Nationwide says prices increased by 0.3% month on month, after taking account of seasonal effects.
Nationwide chief economist Robert Gardner comments: “The housing market has remained fairly stable in recent months, with house prices rising at a modest pace and the number of mortgages approved for house purchase maintained at similar levels to those prevailing before the pandemic
“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs.
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the housing [sales] market. The high value council tax surcharge, which is not being introduced until April 2028, will apply to less than 1% of properties in England and around 3% in London.
“Looking forward, housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect. Borrowing costs are also likely to moderate a little further if Bank Rate is lowered again in the coming quarters.
“This should support buyer demand, especially since household balance sheets are strong. Indeed, in aggregate, the ratio of household debt to disposable income is at its lowest for two decades.”
This optimism is supported by others.
Karen Noye, mortgage expert at Quilter, says: “Inflation is easing and markets think a December rate cut is a possibility. Even if the Bank of England holds off until the new year, expectations of lower rates have already fed into swaps and lenders have started to trim fixed-rate mortgages. Any fall in borrowing costs is crucial for first time buyers who are still facing the toughest affordability conditions in years.”
Tomer Aboody, director of specialist lender MT Finance, adds: “The housing market is the backbone of the UK economy, and even through the tough times with a looming Budget that was feared to have the potential to be hugely damaging, we are seeing a resilient market with buyers and sellers maintaining activity, albeit at a slower pace.
“The high cost of moving is still there, however, and putting off many from doing so, choosing to stay put and improve existing homes instead. Stamp duty in particular is a barrier to mobility, and with the Chancellor missing an opportunity to reduce or reform it in her Budget, the hope is for more interest rate reductions in the new year to encourage transactions and to enable the housing market to function more effectively.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The housing market continues to demonstrate underlying strength in spite of the many challenges facing it, not least the speculation surrounding the Budget, which in the end didn’t turn out to be as bad as many had feared.
“While the market has been a little quieter as some adopted a ‘wait and see’ approach, lenders have remained keen to lend, with funds available to do so. Falling Swap rates, which underpin the pricing of fixed-rate mortgages, have given added impetus to reduce rates and drum up business at a time when there has been less of it around.
“With talk of another base-rate reduction this month, borrowers may be tempted to hold on in the hope of cheaper rates to come but those concerned about budgeting and rate rises might wish to consider locking into a cheaper rate now several months ahead of when they might need it. Then, when they come to take out the mortgage, if rates have fallen further, their broker should help you move onto a cheaper deal; if rates have risen, they will be glad they locked in when they did.”
