UK house prices climbed for the fifth consecutive month in November, setting a new record high of £298,083, according to Halifax (LLOY.L).

Monthly house prices rose by 1.3%, while annual growth accelerated to 4.8%, up from 4% in October. This surge is attributed to improving mortgage demand, fueled by falling interest rates, which have boosted buyer confidence. However, affordability remains a significant hurdle for many potential buyers, according to Halifax, one of the UK’s largest mortgage lenders.

Rising prices and buyer confidence

Amanda Bryden, head of mortgages at Halifax, commented: “UK house prices rose for the fifth month in a row in November, with a 1.3% increase—the largest monthly rise this year. This pushed annual growth to 4.8%, the strongest since November 2022. Consequently, the record average house price of October edged higher still, with the typical property now costing £298,083."

Bryden highlighted improved mortgage demand, spurred by easing mortgage rates, as a key driver of the growth. However, she warned of ongoing affordability challenges for buyers and noted that economic uncertainties could test market confidence.

Looking forward, Bryden anticipates that positive employment data and further reductions in interest rates will continue to support housing demand, although she cautioned that house price growth might slow due to historically high borrowing costs.

Concerns about sustainability

Karen Noye, a mortgage expert at Quilter, noted the recent price rises may reassure current homeowners worried about a prolonged market downturn. However, she questioned the sustainability of the recovery:
“The Bank of England’s recent decision to reduce interest rates to 4.75% has provided some relief to mortgage holders. Yet, many households refinancing soon will still face significantly higher repayments compared to previous fixed-rate deals.”

Regional variations in growth

House price growth across the UK’s regions and nations remains uneven. Northern Ireland led with the strongest annual increase of 6.8%, bringing the average price to £203,131.

Other regions also showed strong performance:

Wales: Prices rose by 4.1% annually to an average of £225,084.

North West England: Prices grew by 5.9%, reaching £237,045.

West Midlands: Prices increased by 5.5%, with the average property now at £257,982.

Scotland saw a more modest rise of 2.8%, with an average price of £208,957. Meanwhile, London retained the highest average house price at £545,439, following a 3.5% annual increase.

Challenges for first-time buyers

Alice Haine, personal finance expert at Bestinvest, highlighted the dilemma for first-time buyers:“With the Bank of England expected to hold rates steady this month, buyers must weigh   whether moving ahead now is wiser than waiting for further rate reductions. Delaying could mean avoiding a significant stamp duty bill but potentially missing out on favorable mortgage deals.”

Outlook for the market

While house prices continue to rise, the pace of growth may slow as the market adjusts to economic conditions. Buyers and homeowners alike will need to navigate affordability challenges and potential shifts in interest rates in the months ahead.