House Prices Rise & Show Promising Signs for Future

The latest Nationwide House Price Index shows a third property price rise in 2023, increasing 0.2% from October to November. This is another surefire sign that the housing market is finding its feet amidst the current cost-of-living crisis.

The figures show the market has defied expectations from the start of the year, lending credence to the notion that the housing market represents one of the more reliable investment opportunities.

Let’s dive into the Nationwide HPI and see what it says about house prices and what they mean for buy-to-let investors.

According to the Nationwide House Price Index, UK house prices rose by 0.2% in November, the third time in a row we have seen a monthly rise in 2023. The number surprised many forecasters, who had predicted a 0.4% fall.

Regarding the year-on-year change, prices were 2% lower than in November 2023 – the strongest annual change since February.

According to those stats, the average property price in November was £258,557.

Why not take a look at some of the best places to invest in property or our UK house price guide!

According to Bloomberg, the UK housing market underwent a sharp correction over the last year, allaying fears that prices would drop by as much as 10%. However, recent house prices show that the average property price is 5.6% below the August 2022 peak.

Bloomberg’s Lucy White states:

“The average value is now about 5.6% below where it peaked in August 2022, roughly half the 10% drop expected for this year.

“Strength in the housing market is another sign of life in the UK economy, which the Bank of England expects to stagnate through much of the next year. To tame inflation, the central bank has lifted interest rates from near zero at the end of 2021 to 5.25%, the most since 2008.”

Our interest rates UK chart is also available to read along with our latest buy to let Manchester guide.

The better-than-expected price drop could be due to the current lack of properties available in the market. This shortage has prompted many property investors into the off-plan market. There is a massive demand for rental properties from tenants, so new-build homes and apartment complexes are needed now more than ever. 

With tenant demand so high, these properties command a significant rental income and thus offer lucrative gross rental yields, particularly if they are in a buy-to-let rental hotspot like Liverpool city centre, where tenants want to live in the city for business opportunities and access to local amenities and good transport links.

In addition, current property prices are only dropping due to the crazy boom period during the COVID-19 pandemic. The huge price growth during Covid was bolstered by the Stamp Duty holiday and low-interest rates, as well as people reevaluating what they needed from their homes. The price drop could be seen as the market correcting itself following an anomalous period.

According to Alex Lyle from the Antony Roberts estate agency, keeping interest rates on hold since September has also helped confidence in the UK property market – as shown in the latest Nationwide House Price Index.

Lyle says:

“At this time of year, competition is more muted, so there are opportunities for buyers who are brave enough not to sit on the fence.

‘Two consecutive holds in base rate have brought some confidence back to the market, helping buyers plan for the future with more certainty.

‘Stock levels are lower, as expected at this time of year, but those properties which are coming to the market are at the right price and at less ambitious levels than in the past.”

These steady interest rates and lower inflation have also positively affected mortgage rates, with Nationwide’s two-yeard fixed deal falling under 5%.

The new 4.99% is indicative of the race to find new customers for mortgage lenders, who try to position themselves as the most attractive proposition for homebuyers.

Mortgage brokers have dubbed the deal as a “watershed moment” and capable of giving the housing market a “shot in the arm”, providing renewed hope in UK properties as we move into 2024.

The RWinvest team have some useful property investment tools from our stamp duty calculator, mortgage calculator and our very popular rental income calculator.