House price growth picked up last month, but the market remains subdued as an uncertain economy and the squeeze on household budgets continue to dampen demand.
According to the Nationwide House Price Index, annual house price growth edged up slightly by 1.9% in November – up from 1.6% the previous month. On a monthly basis, house price growth rose from 0% in October to 0.3%, taking the average UK house price to £214,044, according to Nationwide.
Looking forward, much will depend on how broader economic conditions evolve. In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows.
If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year.
The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead.