House prices surprise with fastest rise for two years

House prices grew at their fastest annual pace for two years in November, according to the latest survey from Nationwide.

The lender said the price of a typical UK home rose by 3.7% last month compared to a year earlier, with property values close to a record high.

It said the acceleration in house price growth was "surprising, since affordability remains stretched by historic standards".

However, it noted that the housing market had remained "relatively resilient" in recent months, with the number of mortgages approved at near pre-pandemic levels.

House prices rose by 1.2% between October and November, Nationwide said, the biggest month-on-month increase since March 2022.

The average property now costs £268,144, according to the building society, close to the record high of £273,751 reached in August 2022.

The number of mortgage approvals last month hit the highest level since August 2022, according to Bank of England figures released last week.

Nationwide chief economist Robert Gardner said low levels of unemployment combined with pay increases that were outstripping inflation had helped to "underpin" the housing market.

In the Budget in October, Chancellor Rachel Reeves said that reduced stamp duty rates in England and Northern Ireland would end in April next year.

However, Mr Gardner said it was "unlikely" this change had been behind November's strong rise in prices, "since the majority of mortgage applications commenced before the Budget announcement".

The changes will mean that house buyers will start paying stamp duty on properties over £125,000, instead of over £250,000 at the moment.

First-time buyers currently pay no stamp duty on homes up to £425,000, but this will drop to £300,000 in April.

Nationwide said the changes to stamp duty meant it expected a jump in house sales in the first three months of 2025 as people tried to beat the deadline, followed by a decline in activity in the following few months.

However, Mr Gardner said overall he expected the housing market to strengthen gradually as consumers' spending power was boosted by lower interest rates and higher pay.