House prices are now growing far higher than expected and at the fastest annual rate in nearly two years, the UK’s largest building society has said.
In the year up to November, houses became 3.7% more valuable, according to Nationwide. Not since November 2022 have prices been rising as fast.
Prices are now just 1% below the all-time highs recorded in the summer of 2022. During that time lockdown savings were being spent as COVID-19 restrictions were unwinding and borrowing rates had not reached recent highs.
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The high increases reported on Monday are significantly above economist forecasts. A rise of just 2.4% had been expected by economists polled by the Reuters news agency.
When looked at on a monthly basis there was the biggest increase since March 2022 as prices are up 1.2% compared to October this year.
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Even Nationwide has described the price growth as “surprising” as it said homes are unaffordable for many by historic standards.
Having a mortgage is far more expensive now than many of the last few years as interest rates stand at 4.75%.
When compared to average incomes house prices are also still relatively high.
The average property now costs £268,144.
Yet mortgage approvals are now approaching levels seen before the pandemic when interest rates were around 1% or 2%.
The increase has been attributed to economic conditions, namely low unemployment, above-inflation wage rises and low household debt.
If these conditions remain, as expected, then house prices will continue to rise.
But on Friday the Bank of England warned around half the UK’s mortgage holders face paying higher rates over the next three years.