Market perception is that bank rate has peaked, says Nationwide economist

House prices rose slightly in November but were still down on last year, according to new figures from Nationwide Building Society. 

The Nationwide House Price Index (HPI) for November, published today (Friday), shows prices rose 0.2% month-on-month, seasonally adjusted, but dropped 2% compared with the same month last year. 


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The average house price in November was £258,557

It was the third successive monthly increase, which resulted in an improvement in the annual rate of house price growth from –3.3% in October to –2%. 

“While this remains weak, it is the strongest outturn for nine months,” said Robert Gardner, Nationwide’s chief economist. 

He said that a shift in interest rate expectations has eased affordability pressures and said that if this was sustained it “could provide much needed support for housing market activity”. 

Gardner explained that in mid-August investors had expected the Bank of England to raise rates to a peak of around 6% and lower them only slightly to around 4% over the next five years. 

This is now shifted to a view that rates have peaked at 5.25% and will be lowered to around 3.5% in the coming years. 

“These shifts are important as they have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing,” he said.

Mortgage approvals for house purchases has been running at roughly 30% below pre-pandemic levels in recent quarters. 

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“While mortgage rates are unlikely to return to the lows prevailing in the aftermath of the pandemic, modestly lower borrowing costs, together with solid rates of income growth and weak/negative house price growth, should help underpin a modest rise in activity in the quarters ahead,” said Gardner. 

“Nevertheless, a rapid rebound still appears unlikely. 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.” 

The average house price in November was £258,557.