UK house price growth 'fastest for almost six years'

UK house prices are 6.5% higher than a year ago - the sharpest rise for nearly six years, the Nationwide has said.

The acceleration came as the housing market remained "robust" despite the economic effects of the coronavirus pandemic, the lender said.

House prices were 0.9% higher in November than in October, with the average property valued at £229,721, the Nationwide said.

But it added that property price growth was expected to slow.

Changing priorities

House prices have risen at a relatively rapid rate in many parts of the UK in the late summer and autumn as some people sought a change in lifestyle, or more space to work from home.

There was also some pent-up demand from the first period of lockdown, and some buyers have been looking to take advantage of stamp duty - or its equivalent - tax breaks in different parts of the UK.

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However, Robert Gardner, Nationwide's chief economist, said the economic fall-out from the Covid crisis would eventually be felt in the housing market.

"The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy," he said.

"Housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March."

Longer-term change

Analysts say a change in working trends post-vaccine could also affect the market.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: "A relatively narrow cohort of well-off households, who already own their homes with little debt, seem to be driving the market with the savings that they have realised this year from working from home.

"House prices remain vulnerable to fall next year, when the trend towards working from home will be going into reverse, stamp duty will be higher, and mortgage rates still will be above their pre-Covid level, due to the weakened labour market."

The Nationwide also said its research suggested properties in national parks carried a 20% premium when sold, with homes on the outskirts of these areas also selling for 6% more than the equivalent property elsewhere.