Recent data from Nationwide, the UK’s largest building society, provides a snapshot of a housing market that continues to defy broader economic uncertainty and budgetary changes. Despite widespread anticipation of subdued performance ahead of November’s budget, the average house price in the UK actually rose by 0.3% month-on-month in November. This figure surpassed the 0.1% increase expected by economists polled by Reuters, signaling a market more robust than many anticipated.

The average home price now stands at £272,998, up from £272,226 in October. This steady, though modest, growth highlights the ongoing resilience in the face of headwinds such as subdued consumer confidence and a labor market showing signs of weakening. According to Robert Gardner, Nationwide’s chief economist, “the housing market has remained fairly stable in recent months with house prices rising at a modest pace.” Gardner’s comments reflect a broader sentiment that, while the market is not experiencing heady price surges, it is maintaining a level of stability that will be welcomed by both current homeowners and prospective buyers.

One of the most talked-about aspects of the recent budget has been the introduction of a new high-value council tax surcharge, labeled by some as a “mansion tax.” Chancellor Rachel Reeves announced that, starting in April 2028, homes in England valued at more than £2 million will be subject to a surcharge starting at £2,500 per year, with the highest band, homes worth over £5 million, paying £7,500 annually. While this has grabbed headlines, especially among high-end property owners, Nationwide’s analysis suggests the impact on the wider housing market will be limited. Gardner points out that less than 1% of properties in England, and about 3% in London, fall into these top-tier price categories. Therefore, for the vast majority of homebuyers and homeowners, this policy will be largely irrelevant.

The annual rate of house price growth has slowed to 1.8%, down from 2.4% in October, marking the slowest rate since June 2024. While this deceleration may concern some, it is important to note that the market has generally exceeded economists’ expectations. Reuters’ survey of economists predicted only a 1.4% annual rise, which means the market is outperforming even as growth moderates.

Several factors have contributed to this resilience. Key among them is the trend of lower interest rates, which has helped to support market activity. The Bank of England cut borrowing costs in August and recently voted to keep rates steady at 4%. This move was closely contested within the Bank’s monetary policy committee, indicating ongoing uncertainty about the direction of rates. However, inflation appears to be under control, with the latest data suggesting it peaked at 3.8%, below the previous prediction of 4%. This opens the door for potential further rate cuts, with market watchers widely expecting the Bank to lower its main rate to 3.75% in December.

The lower cost of borrowing has made mortgages more accessible, which is reflected in the Bank of England’s data showing that mortgage approvals in October surpassed expectations. For homebuyers, this means financing a purchase may become gradually more affordable, especially if interest rates continue to edge downward. Gardner notes, “Looking forward, housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect. Borrowing costs are also likely to moderate a little further if bank rate is lowered again in the coming quarters.”

Affordability is also being supported by rising wages, which have outpaced house price growth in recent months. This trend is crucial for first-time buyers and those looking to move up the property ladder, as it improves the ratio of income to house prices, making homeownership more attainable in a market where affordability has often been a challenge.

While some analysts had expected the property market to slow further in anticipation of the November 26 budget and its tax and spending measures, the data so far suggests that the majority of homebuyers are taking these changes in stride. That said, Gardner does caution that the mansion tax could have a dampening effect on the supply of new rental properties, as owners of high-value homes may reconsider their investment strategies. However, since this segment represents a small fraction of the overall market, the broader effects are expected to be minor.

The UK’s housing market continues to demonstrate resilience, with house prices edging upward and activity holding steady despite a challenging economic environment and significant policy announcements. For homeowners, this stability provides reassurance about the value of their assets. For buyers, especially those not in the high-value bracket, the outlook is cautiously optimistic as affordability improves and borrowing costs may ease further in the months ahead. The latest data suggests that, while growth is slowing, the market remains fundamentally sound, offering opportunities for both buyers and sellers in the coming year.