The property market is starting to show some green shoots of recovery, with annual price growth at its strongest since February.
UK house prices rose 0.2% month on month in November, according to Nationwide’s latest House Price Index, bringing the average price of a property in the UK to £258,557. House prices are down 2% compared to a year ago, the building society said, but it is the strongest number seen for nine months.
Affordability pressures are starting to ease for buyers too, with hopes that interest rates may not reach levels as high as previously predicted.
Robert Gardner, chief economist at Nationwide said: “There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity.
“In mid-August, investors had expected the Bank of England to raise rates to a peak of around 6% and lower them only modestly (to c.4%) over the next five years. By the end of November, this had shifted to a view that rates have now peaked (at 5.25%) and that they will be lowered to around 3.5% in the years ahead.”
Mortgage approvals rise
The Bank of England’s latest money and credit statistics supported Nationwide’s more positive picture, revealing a small uptick in the number of mortgage approvals. They rose from 43,700 in September to 47,400 in October, although they remain a long way off pre-pandemic levels.
However, despite growing signs of life in the property market, Nationwide said any rapid rebound in activity “still appears unlikely”.
Mr Gardner said: “Cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, but consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries.
“Moreover, while markets are projecting that the next Bank Rate move will be down, there are still upward risks to interest rates. Inflation is declining, but measures of domestic price pressures remain far too high.”
If your current mortgage deal is due to finish soon and you’re concerned that we could see further increases in interest rates, it may be worth starting your search for your next deal sooner rather than later. The main advantage of securing a rate early is that you’ll have protection if rates go up, but if they go down, you’ll be able to review your options and move to a lower rate before your existing deal ends.
