House prices in the UK increased for the second consecutive month, with the country's largest mortgage lender, Halifax, reporting a 0.5% rise in November. The market is showing signs of heightened activity, fuelled in part by a slight increase in mortgage approvals.
Despite the recent positive trend, prices remain 1% lower than the same period last year, with the average property priced at £283,615. Halifax anticipates continued market pressure in 2024, emphasising that the modest rise in prices is influenced more by a shortage of available properties than a substantial surge in buyer demand. This sentiment aligns with Nationwide's recent observations.
Kim Kinnaird, Director at Halifax Mortgages, acknowledged that house prices have held up better than expected over the past year. However, she emphasised that the shortage of available properties remains a key factor supporting prices, rather than a significant strengthening of buyer demand.
While the Bank of England has raised interest rates over the past two years to combat inflation, recent expectations that rates have peaked led to a decline in mortgage rates. Despite warnings from the Bank of England against anticipating rate cuts, the average two-year fixed residential mortgage rate has decreased to 6.01%, down from 6.86% in July.
The Bank's main interest rate currently stands at a 15-year high of 5.25%, contributing to higher mortgage rates and increased home-buying costs. Nevertheless, the recent decline in mortgage rates has resulted in a rise in buyer confidence.