The latest Nationwide House Price Index shows that annual UK house price growth slowed to 4.4% in November, down from 7.2% in October.

Month-on-month prices fell 1.4%, the biggest fall since June 2020, following a 0.9% drop in October.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:

“The fallout from the mini-Budget continued to impact the market…

“While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.

“Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.

“The market looks set to remain subdued in the coming quarters. Inflation is set to remain high for some time and Bank Rate is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.

“The outlook is uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible.”

Industry reactions

Matthew Thompson, Head of Sales at Chestertons:
“Despite being a quieter time of year, the November market in London has been fairly active after the initial panic caused by the mini-budget. As mortgage rates have settled, buyers have come to terms with higher interest rates and realise that, in the majority of cases, it still makes sense to buy. Compared to November 2021, our branches have experienced a 23% uplift in the number of properties being sold, however, there has been a significant downward trend in market appraisals being carried out. This suggests that, although buyer sentiment is fairly strong, some sellers are still holding off due to economic uncertainty.”

Anthony Codling, CEO of twindig:

“Whilst house prices surged during the pandemic they have been caught out but rising mortgage rates and higher living costs.

“However, we must remember that average house prices are still around £47,000 higher than they were at the start of the pandemic and, whilst not all will agree with me, I think it unlikely that all these gains will be completely reversed by the cost of living crisis.

“We are already starting to see wage growth in some sectors and mortgage capacity (and therefore house prices) are linked to wages. It will no doubt be a challenging year ahead for the housing market but whilst it is starting to take a hit, it has not been knocked out. ”

Emma Cox, MD of Real Estate at Shawbrooks:
“The property market is coming to the end of a challenging year, with uncertainty the predominant theme. Demand has largely slowed which has had a knock-on impact on asking prices. Incentives introduced in the latest Chancellor’s Budget have yet to make an impact among first-time buyers, many of whom are putting off plans and choosing to stay renting.

“With prices expected to fall further next year before stabilising, there could be deals on the table for savvy buyers. Professional property investors in particular could take advantage of this opportunity to expand their portfolios. And with greater demand in the rental market, quality rental properties will likely prove popular.”

Tom Bill, head of UK residential research at Knight Frank:
“The impact of the mini-Budget continued to reverberate in November, with the largest monthly fall in house prices since the early days of the pandemic.

“Financial markets have been reassured by new government’s economic plan but the mortgage market is playing catch up. Mortgage rates should keep edging downwards as the effects of the mini-Budget wash through the system, which should settle the nerves of buyers and sellers, even as a 13-year period of ultra-low borrowing costs comes to an end.

“We expect house prices to fall by 10% over the next two years and the reality of higher rates will bite more after Christmas. Mortgage offers made before the mini-Budget will begin to lapse and increase downwards pressure on prices from 2023.”

Nicky Stevenson, Managing Director at Fine & Country:
“Annual house price growth continued to cool in November, as buyers remained anxious about increased borrowing costs and affordability pressures. These factors mean some buyers may have temporarily pressed the pause button following the recent period of volatility in the mortgage market.

“While a further cooling of prices is expected over the winter, this effect may be mitigated in part by the return of stability to lending markets and more realistic pricing of loans. In the meantime, buyers will be keeping their feet firmly on the ground when making offers.”

Iain McKenzie, CEO of The Guild of Property Professionals:
“Let’s not forget though that house prices have been growing at unprecedented levels in the last couple of years, and a slight readjustment in the market was likely to happen sooner or later.

“This cooling effect is unlikely to turn into a great freeze, so long as the demand from buyers remains buoyant. We previously saw house prices drop significantly during the Global Financial Crisis, however, growth eventually returned and has sustained ever since.”