UK house prices grew by an average of 1.9 per cent in November, up 0.3 per cent month on month to recover from a five-year low in October, Nationwide announced this morning.
The figure is expected to improve if economic and political uncertainty surrounding Brexit lifts over the coming months and employment continues to rise, the lender said, with the average house price standing at £214,044.
It comes after mortgage approvals rose to a nine-month high last month.
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “These figures are better than expected, after unchanged monthly price and lowest annual growth for more than five years last month.
“They come on the back of encouraging mortgage approval and transaction figures yesterday which show, once again, that realistic buyers and sellers are taking advantage of very low mortgage rates and shrugging off Brexit concerns.”
The construction of new houses has also picked up after new housing stock fell by almost 60 per cent following the financial crisis.
New build completions in England in 2017/18 hit 195,300, around three per cent below 2007/08 levels.
The strongest growth in housing supply was in the south west, London and the east of England, with more modest supply growth in the north east and north west, where house prices are still near 2007 levels.
Housing supply has also been boosted by the change of use of shops, offices and other commercial buildings into homes.
This year has seen the change of use of properties slow to an estimated 30,000 homes, which is still around 70 per cent higher than 2007/08 levels.
Nationwide chief economist Robert Gardner said: “Looking forward, much will depend on how broader economic conditions evolve.
“In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows.
“If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year.
“The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead.”
Mike Scott, chief property analyst at estate agent Yopa, said: “It now seems almost certain that the increase in prices for the whole of 2018 will exceed the Nationwide’s forecast of one per cent.”
But he said that the growth in new housing stock remains 80 per cent lower than the 300,000 figure recommended by a House of Lords committee in 2016.
“We have not yet begun to catch up on the backlog built up during the years after the credit crunch when the number of new homes collapsed,” Scott said. “Total supply in the market thus remains tight, and we do not expect supply to exert any downwards pressure on house prices next year.”
Source: City AM