UK House Price Inflation Highest Since January 2015

UK house prices rose the most in nearly six years in November, but the outlook remains highly uncertain and the housing market activity is set to slow in the coming quarters amid a surge in the coronavirus pandemic that has forced a partial lockdown in some regions, the Nationwide Building Society said Tuesday, citing results of the monthly house price survey.

The house price index rose 6.5 percent year-on-year, which was the fastest pace of increase since January 2015. House price inflation was 5.8 percent in October. Economists had forecast a 5.5 percent increase.

Compared to the previous month, house prices climbed a seasonally adjusted 0.9 percent in November after a 0.8 percent increase in October. Economists had expected the rate to slow to 0.3 percent.

In October, property transactions rose to 105,600, the highest level since 2016, while mortgage approvals for house purchase were at their highest level since 2007.

Nationwide economist Robert Gardner said the outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.

“Behavioral 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,” Gardner said.

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

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