House prices increased by 0.1% month-on-month in November, according to an index.
Nationwide Building Society highlighted that the average property cost is 2.5% higher than last year, now standing at £209,988.
The yearly house price growth rate was also 2.5% in October
Nationwide’s chief economist, Robert Gardner, highlights that the decision to axe stamp duty for those buying their first home to a price of up to £300,000, with relief for those buying a property of up to £500,000, may only have a modest effect on overall demand.
Mr Gardner said in numerous regions, first-time buyers previously paid little or no stamp duty as the cost of the regular first-time buyer property was under the general threshold of £125,000 where stamp duty kicks in.
Mr Gardner said: “The potential savings are more substantial for borrowers where house prices are higher, especially in London and the South East.”
The chief economist highlighted that the emphasis on boosting housebuilding in the Budget is important, “as a shortage of homes is a key reason why affordability is so stretched in large parts of the country”.
Mr. Gardner said that new build completions in England over the last twelve months had decreased 13% below 2007 levels.
However, he continued: “The picture improves significantly if we add in new dwellings that have been created by converting larger homes into more units and those created by ‘change of use’, such as offices transformed into flats.
“Indeed, on this broader measure, the number of dwellings being created each year is now only 3% lower than the levels recorded in 2007 (even after accounting for demolitions).”
In London, change of use has given a strong boost to housing supply, he said, adding: “In London, homes created by ‘change of use’ accounted over a fifth of new dwellings added in the capital in 2016/17, well above the 16% recorded in the rest of England.”
The chief economist highlighted that other cities with costly housing and limited supply also seem to be benefitting as he added: “For example, in Bristol, net change of use accounted for the majority of new housing supply in 2016/17, with 1,040 additions from ‘change of use’ versus 900 new builds.”
Howard Archer, chief economic adviser at EY ITEM Club, states: “Even if successful, the Chancellor’s measures to boost house building in the Budget will take time to have a significant effect so are unlikely to markedly influence house prices in the near term at least.”
