Prices rise at highest rate for five years

HOUSE prices rose by 6.5 per cent in November — the highest rate since January 2015.

That’s according to the latest House Price Index published by the Nationwide building society.

It also found that prices were up by 0.9 per cent from October, after taking into account seasonal factors.

This puts the average price of a home at £229,721 in November, up from £227,926 in October.

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth accelerated from 5.8 per cent in October to 6.5 per cent in November, the highest outturn since January 2015.

“House prices rose by 0.9 per cent month-on-month in November after taking account of seasonal effects, following a 0.8 per cent rise in October.

“Data suggests that the economic recovery had lost momentum even before the latest lockdown came into effect. Economic growth slowed sharply from 6.3 per cent in the month of July to 2.2 per cent in August and 1.1 per cent in September, even though the economy was still around eight per cent smaller than its pre-pandemic level at that point.

“Rising infection rates and tighter social restrictions will have resulted in a further hit to growth in October and November.

“Labour market conditions also weakened with the unemployment rate rising to 4.8 per cent in the three months to September — still low by historic standards, but up from an average of 3.8 per cent in 2019.

“The extension of the furlough scheme to March 2021 will help limit job losses in the short term by enabling firms to retain more staff that they would have done otherwise.

“Despite these headwinds, housing market activity has remained robust. October saw property transactions rise to 105,600, the highest level since 2016, while mortgage approvals for house purchase in the same month were at their highest level since 2007 at c97,500.

“Behavioural shifts as a result of covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”