United Kingdom: House prices tick up in November
November 30, 2017
According to the Nationwide Building Society (NBS), house prices in the United Kingdom rose 0.1% in November compared to the previous month in seasonally adjusted terms, down from October’s 0.2% increase. On an annual basis, house prices rose 2.5% in November, matching October’s figure. The average house price in November was GBP 209,988 (November 2016: GBP 204,947).
The overall picture remained largely the same as in recent months. On one hand, a higher employment rate and low mortgage rates are propping up demand, although this is being partially offset by the ongoing pressure on consumers’ purchasing power as a result of elevated inflation. On the supply side, the dearth of homes on the market is lending support to prices. However, changes are afoot. In the annual budget presented in November, Chancellor Philip Hammond announced the abolition of stamp duty on homes worth up to GBP 300,000. The measure is likely to boost overall demand only slightly, but more so in the pricier London and South East region. The budget also set a target of increasing the rate of new homes per year to 300,000 by the mid-2020s in order to boost housing affordability.
Looking ahead, house price growth is likely to continue, albeit at a moderate rate. Changes to stamp duty and the extension of the government’s Help to Buy scheme should help support prices. In addition, the supply of homes on the market is likely to remain tight in the short run, despite measures announced in the budget. However, slow economic growth and the pressure on consumers’ purchasing power will limit any increases.
Author: Oliver Reynolds, Economist