The UK residential real estate market in November 2024 saw a remarkable recovery, with home prices rising at the highest annual pace in two years. The growth was driven by improved mortgage lending conditions and rising wages, which helped boost demand for homes despite continuing macroeconomic challenges.
Record price growth
<According to a report by mortgage lender Nationwide, the average home prices rose by 3.7% year-on-year in November, compared with 2.4% in October. This represents the highest rate of growth since November 2022.
Month-on-month, home prices rose by 1.2%, bringing the average house price to £268.144K (equivalent to $340.22K), a level just 1% below the historical peak recorded in 2022.
Month-on-month, home prices rose by 1.2%.
Supported by strong economic factors
Robert Gardner, chief economist at Nationwide, noted that "the housing market has shown remarkable resilience in recent months," with the number of mortgage loan approvals approaching pre-pandemic levels, despite rising interest rates.
Robert Gardner, chief economist at Nationwide, added that the housing market has been "remarkably resilient" in recent months, with the number of mortgage loan approvals approaching pre-pandemic levels, despite rising interest rates. <Gardner added that the recent decline in mortgage interest rates, after peaking in the summer of 2023, has done much to boost demand. The strength of the labor market, with low unemployment and wage growth outpacing inflation, has also played a critical role in the housing market recovery and continued price appreciation.
Gardner added.
Increase in mortgage loans
Supporting this trend, Bank of England data last week revealed that banks approved the largest number of mortgage loans since August 2022. This improvement reflects rising momentum in the market, driven by falling borrowing costs after the Bank of England cut interest rates last month for only the second time in four years.
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Positive market outlook
<Gardner expects the gradual improvement in the housing market to continue over the coming months, noting that the expected economic recovery will boost the market's underlying momentum. He explained: "A combination of relatively low interest rates and continued growth in wages relative to house prices is likely to ease affordability constraints."Gardner expects the housing market to continue to gradually improve in the coming months, noting that the expected economic recovery will boost the market's underlying momentum.
Supply shortages and price pressures
Despite a marked improvement, pressures remain due to a lack of supply of homes. The Labor government headed by Keir Starmer, which took power in July 2024, promised to reform the planning system to speed up construction and increase supply. However, this shortage is likely to remain a key factor affecting prices in the medium term.
Future Outlook
<The UK is entering a phase of gradual housing market recovery, benefiting from improving economic conditions and lower lending costs. As the government's efforts to address supply continue, the question remains as to how sustainable this growth will be in light of global and domestic economic challenges.
