The UK housing market showed unexpected resilience last month, with prices rising despite pre-budget uncertainty, according to the latest data from Nationwide Building Society. The lender also downplayed the potential impact of the new high-value property tax announced by Chancellor Rachel Reeves.
Steady Growth Amid Economic Headwinds
The average UK house price increased by 0.3% between October and November, a figure that surpassed economist forecasts which had predicted a more modest 0.1% rise. This pushed the typical property value to £272,998, up from £272,226 the previous month.
While the annual rate of house price growth slowed to 1.8% – its lowest point since June – it still exceeded expectations of a 1.4% increase. Robert Gardner, Nationwide's Chief Economist, noted the market's stability. "Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience," he said.
'Mansion Tax' Impact Deemed Limited
All eyes were on the Chancellor's budget announcement last week, which included a new council tax surcharge for high-value homes in England. From April 2028, properties valued at £2 million or more will face an additional annual levy.
The surcharge structure includes four bands:
- £2,500 per year for properties worth over £2 million.
- Rising to £7,500 annually for homes valued above £5 million.
However, Nationwide moved quickly to assuage market fears. Gardner stated the changes are "unlikely to have a significant impact on the housing market," emphasising that the surcharge will apply to fewer than 1% of properties in England and approximately 3% in London.
Interest Rates and Market Sentiment
Lower borrowing costs have provided crucial support for housing activity. The Bank of England held its base rate at 4% in November, following a cut in August. Notably, the Bank indicated inflation likely peaked at 3.8%, lower than its previous 4% forecast, hinting at potential future rate reductions.
This environment has created a complex landscape for buyers and sellers. Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, observed that many prospective buyers adopted a 'wait and see' approach ahead of the budget. "There’s a decent chance that 2026 will usher in more positivity," she suggested, pointing to typical New Year market boosts.
Mortgage brokers report continued lender appetite. Mark Harris, CEO of SPF Private Clients, advised, "Borrowers may be tempted to hold on in the hope of cheaper rates to come but those concerned about budgeting might wish to consider locking into a cheaper rate now."
In summary, the UK property market continues to demonstrate a cautious stability. With the direct impact of the new property tax confined to a very small segment of homeowners, the fundamental drivers of modest price growth – namely interest rates and employment – are expected to remain the primary focus for the majority of the market in the coming months.
