This morning, Nationwide Building Society announced a 0.3% increase in UK house prices for November. November’s rise means that, on average, a home now costs £272,998. The average is up on £272,226 in October. This indicates a slow but steady rebound in the housing market, despite the wildcard of the government budget disaster in waiting.
On the yearly rate of increase in house prices, there was a surprising deceleration to 1.8%, from 2.4% in October to 1.8% NAR. Economists were forecasting a more modest 1.4% rise. This is indicative of their varying expectations for the housing market as it continues to navigate a post-pandemic economy and possible changes from tax reform.
This means that house prices – both new and existing – are climbing. New buyers have taken a more cautious approach amidst concerns surrounding the new budget proposals. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said most buyers have been left sitting on the fence. They’re waiting to see how the overall budget will impact their own buying decisions.
“While the market has been a little quieter as some adopted a ‘wait and see’ approach, lenders have remained keen to lend, with funds available to do so.” – Mark Harris
Past budget proposals were limited by a major council tax surcharge expected to begin in April 2028. Market analysts are just beginning to gauge the effects on the housing market. This new surcharge specifically levies properties valued at £2 million or more. It will have a huge effect on less than 1% of homes in England and around 3% of the properties in London. The surcharge will result in four separate price bands. For residential properties with a value of more than £2 million, the starting charge is £2,500 annually. This rises to £7,500 for properties over £5 million.
Robert Gardner, chief economist at Nationwide, shared valuable perspectives on the current state of our housing market. He emphasized that the changes to property taxes introduced in the budget are not expected to significantly affect the overall housing market.
“The changes to property taxes announced in the budget are unlikely to have a significant impact on the housing market.” – Robert Gardner
Even despite these challenges there is reason for and indeed some cautious optimism about the growth opportunity in 2026. Coles remarked that historical trends suggest January often brings a boost in activity. She said other elements of the market continue to be positive, even in the face of current economic headwinds.
“There’s a decent chance that 2026 will usher in more positivity. We often see a boost in January, and despite challenges, there are a few things working in the market’s favour. The budget brought a property tax that will only affect a small slice of the market.” – Sarah Coles
As rates continue to go up and down, borrowers are looking at choices between their current loans. Harris acknowledged that some will hold out, hoping for future base rate decreases, while others will choose to commit to lower rates now.
“With talk of another base rate reduction this month, borrowers may be tempted to hold on in the hope of cheaper rates to come but those concerned about budgeting and rate rises might wish to consider locking into a cheaper rate now several months ahead of when they might need it.” – Mark Harris