House prices made a surprise jump in November, with experts predicting they will continue to rise as buyers “race to secure a deal” ahead of upcoming changes to stamp duty.
The average UK house price rose by 1.2% month-on-month in November, according to Nationwide Building Society, which was the biggest increase since March 2022.
Meanwhile, the annual price rise to last month was 3.7 per cent, up from 2.4 per cent to October, marking the fastest rise since November 2022.
It takes the average house price - now £268,144 - to just 1 per cent below the all-time high recorded in the summer of 2022.
The price rise is unlikely to have been impacted by the changes announced in Labour’s Budget on stamp duty, which will see first-time buyers paying the levy on purchases of more than £300,000 from next spring. The current threshold is £425,000.
For people not buying their first home, the threshold for paying the tax will fall from £250,000 to £125,000.
This, experts say, could push up prices further in the coming months as demand surges with buyers looking to take advantage of the current threshold level for stamp duty.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager, said: “The decision not to extend the current relief on stamp duty thresholds beyond the end of March was a further blow for the market, though this is likely to lead to an uptick in house prices over the next four months as buyers race to secure a deal before the deadline to avoid a bigger tax bill.
“Prices may be more muted from April, though the prospect of further interest rate cuts may support the market if affordability levels continue to improve.”
Robert Gardner, Nationwide’s chief economist, described the latest rise in house price growth to November as “surprising” with prices still big compared to average incomes, while interest rates remain high.
He said: “Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the higher interest rate environment.
“Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.”
Looking ahead, Mr Gardener also said he expected a jump in sales in the first three months of 2025 ahead of the stamp duty changes, before a “period of weakness” following them.
He said: “This has the potential to shift the demand/supply balance in the near term and impact price movements.
“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Nicky Stevenson, managing director at estate agent group Fine &Country, said: “Rising inflation and living costs could prompt some buyers to pause plans and focus on savings. While activity is strong now, the true test of the market’s resilience will come in the new year.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We might well see activity remain higher in the coming months, as buyers hurry to get in ahead of the end of the stamp duty holiday on March 31.
“However, as prices head to just 1% below their peak, and mortgage rates remain relatively high, there’s a growing chance that affordability raises its ugly head again. This could keep a lid on both sales and prices, as it just becomes too big a stretch to get onto the property ladder – or move up it.”
