House prices are now almost 15% higher than when the pandemic struck, with only a slight slowing expected into the new year.

Annual house price growth increased slightly to 10% in November, pushing prices up by 0.9% to an average of £252,687, according to Nationwide’s latest House Price Index.

house prices

Despite some inevitable cooling off in October following the stamp duty holiday – with the number of housing transactions down almost 30% year-on-year – activity has been extremely buoyant in 2021, says chief economist Robert Gardner (pictured).

The number of housing transactions so far this year is actually tracking close to the number seen at the same stage in 2007, before the global financial crisis struck, he adds.

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Buoyant market

Robust labour conditions suggest a fairly buoyant market in the coming months, says Gardner, but the outlook remains uncertain. “While consumer confidence stabilised in November, sentiment remains well below the levels seen during the summer, partly as a result of a sharp increase in the cost of living. Moreover, inflation is set to rise further, probably towards 5% in the coming quarters.”

Many estate agents and financial experts believe that house prices are likely to continue to rise in 2022 due to demand, but at a slower rate.

Rate rise

With an expected 0.25% rise in interest rates next month, mortgage lenders have already factored a rise into their own pricing, with mortgage interest rates increasing slightly ahead of this. Some report that their re-mortgage business is particularly brisk as homeowners make the most of very low interest rates.

Andrew Simmonds, director at Bristol-based Parker’s Estate Agents, believes that although it won’t scupper the market, a rise in rates will marginally impact sentiment. He adds: “It’s certainly likely to cool the enthusiasm and excitement of many buyers to pay top dollar for their next home, but that might not be a bad thing. If I am being frank, we could do with something that takes a bit of fizz out of the housing market.”

Read the index data in full.

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