House prices rise for third consecutive month: Have we reached the bottom of the market?
Nationwide have just annouced that UK house prices continued to recover in November with a slight rise of 0.2%, according to Nationwide's latest data. Read our full report here.
Nationwide's latest data indicates a resilient housing market, persisting in its upward trajectory until the year-end. November witnessed a 0.2% increase in average house prices, marking the third consecutive monthly rise.
Robert Gardner, Chief Economist at Nationwide, remarked, "UK house prices experienced a 0.2% growth in November, factoring in seasonal effects. This marks the third consecutive monthly upturn, contributing to an improvement in the annual rate of house price growth from -3.3% in October to -2.0%. While still modest, this represents the most robust performance in nine months."
Gardner highlighted a notable shift in market expectations regarding the future path of the Bank Rate. In mid-August, investors anticipated the Bank of England raising rates to a peak of approximately 6%. However, by the end of November, the outlook had changed, with the belief that rates had peaked at 5.25%, likely to decrease to around 3.5% in the coming years.
He explained the significance of these shifts, pointing out their impact on longer-term interest rates (swap rates) and their influence on fixed-rate mortgage pricing. Sustained changes in this direction could alleviate affordability challenges that have hindered housing market activity.
Gardner acknowledged that while mortgage rates might not return to post-pandemic lows, slightly reduced borrowing costs, coupled with steady income growth and subdued/negative house price growth, could support a modest increase in activity in the coming quarters.
However, Gardner tempered optimism, noting that a rapid rebound seemed unlikely. Although cost-of-living pressures were easing, with inflation below average wage growth, weak consumer confidence and subdued new buyer enquiries persisted among surveyors.
He concluded with a cautionary note on interest rates, emphasizing that while markets anticipated a downward move, there were still upward risks. Despite declining inflation, domestic price pressures remained high. Gardner highlighted the Bank of England's Monetary Policy Committee's mixed stance, with three members favoring a rate increase in early November, while the remaining six opted to maintain the rate at 5.25% for the time being.
What does this mean to local homeowners?
We have been discussing this in the offices and if we're not currently navigating the depths of the UK housing market slowdown, we're certainly in close proximity. With inflation below 5% and the best five-year fixed-rate mortgage dropping below 4.5% this week, speculation now revolves around the timing of the next rate cut rather than the magnitude of the next rise.
The Nationwide report confirms the shift we have seen over the last couple of months with our two
highest sales months for 2023 being October and November.
After a somewhat stagnant summer, there's optimism for a rejuvenated spring in the UK housing market in 2024, provided a general election doesn't materialize in the first half of the upcoming year.
In the face of sluggish economic trends, the property market pleasantly surprised us last month, revealing a modest uptick in house prices.
It's a crucial reminder that property prices may fluctuate through challenging times, but growth is never far away. The recent downturn may have unlocked opportunities for buyers who previously felt priced out of homeownership.
While some homeowners may harbor concerns about selling in the current climate, fearing potential depreciation, adopting a long-term perspective is crucial. With cost-of-living pressures easing and inflation cooling, consumer confidence signals improvement in the coming year, pointing towards a return to steady growth in the property market by 2024.
Our on-the-ground observations align with these figures – the market continues to display resilience. Despite a 15-year high in the base rate and persistent inflation, buyers remain confident, with little indication of an imminent correction. However, sales are taking longer, and prices are experiencing a softening trend. Fortunately, robust employment figures lend support to overall market activity.
Buyer confidence is returning and people are buying, albeit they are waiting to find the perfect home and they want to feel it offers good value for money.
While we anticipate minimal change in the months ahead, a gradual improvement is on the horizon, as optimism tends to manifest more prominently at the start of the year. Much will be influenced by the timing of a general election, the policies adopted by the winning party, and the impact of Christmas spending on inflation. However, it's heartening to note that we are now witnessing positive developments in the property market.
This blog has been written by Stuart Scott, owner of Love Homes. If you have any questions about the property market please contact me on 01525 713111, stuart@lovehomes.uk or via WhatsApp on 07411 668259.