UK house prices have climbed to a new all-time high, yet the pace of annual growth has slowed significantly, according to the latest industry data. The figures for November reveal a market in a state of flux, caught between record valuations and weakening momentum.
A Market in a "Static Period"
Data from the Halifax house price index shows the average property price edged up by a mere £138 in November, reaching a new record of £299,892. This marginal monthly increase followed a more substantial 0.5 per cent rise in October. However, the annual growth rate tells a different story, slowing sharply to just 0.7 per cent from 1.9 per cent the previous month. This marks the weakest year-on-year increase since March 2024.
Industry experts have attributed this plateau to the political and fiscal uncertainty preceding the Autumn Budget on November 26. Karen Noye, head of mortgages at Quilter, described it as a "very static period" where many potential buyers held back, awaiting clarity on potential housing measures and tax changes. "The dust has now settled post budget," she noted, "giving borrowers a clearer view of what the early months of 2026 may look like."
Regional Divergence and Policy Impacts
The national average masks stark regional differences. While the North West saw the strongest annual growth at 3.2 per cent (average price £245,070) and the North East also performed well, the story in the South, particularly London, was one of decline. Property prices in the capital fell by 1.0 per cent over the year, though it remains the UK's most expensive market with an average price of £539,766.
Two specific policy measures are set to disproportionately affect London. The introduction of a 'mansion tax' in the Autumn Budget, which will apply higher council tax to properties valued over £2 million from 2028, will target the capital's high-value stock. Furthermore, the £450,000 cap on properties eligible for purchase with a Lifetime ISA continues to hinder first-time buyers in London, as spending over the limit results in the loss of both the government bonus and the saver's own funds.
Outlook: Gradual Growth Amid Affordability Crisis
Looking ahead, mortgage heads at major institutions anticipate a return to gradual growth. Amanda Bryden of Halifax pointed to steady market activity and expectations of further interest rate cuts as reasons for optimism, stating she anticipates "property prices will continue to grow gradually into 2026." Nathan Emerson of Propertymark agreed, suggesting further rate reductions will "revitalise mortgage lending and support a healthier market."
However, a significant cloud remains on the horizon: affordability. Karen Noye emphasised that this is "the biggest hurdle," especially for first-time buyers. While fixed mortgage rates have dipped and a first Bank of England rate cut is anticipated, progress is slow. High living costs continue to severely limit borrowing power, ensuring that the dream of homeownership remains out of reach for many.
