House prices edged higher in November, according to the latest figures from Nationwide Building Society.
Modest Monthly Growth
The typical UK home increased in value by £772, or 0.3%, rising from £272,226 in October to £272,998 in November. This represents a small acceleration from the 0.2% growth recorded between September and October, despite talk of tax rises in the recent Budget causing some buyers to postpone decisions.
Annual Price Comparison
Compared with the same period last year, house prices are 1.8% higher. This is slightly below the 2.4% annual increase recorded in October, reflecting a period of more cautious buyer sentiment.
Impact of the Budget
The rise comes shortly after Chancellor Rachel Reeves unveiled her autumn Budget, which introduced a series of new taxes affecting landlords and owners of high-value properties.
Higher Taxes for Landlords
From April 2027, rental income will be taxed at higher rates. Basic rate taxpayers will face a 22% rate, while higher-rate taxpayers will pay 42%, representing a 2 percentage point increase above standard income tax levels.
Dividend Tax Increase
Landlords holding properties through limited companies will also be affected, as the Chancellor announced a 2 percentage point increase on dividend income, further impacting rental investors.
Mansion Tax for High-Value Homes
The Budget also included a new council tax surcharge for homes valued above £2 million, effectively a form of “mansion tax.” The charge is expected to start in 2028, with annual payments beginning at £2,500 and rising for more expensive properties.
Potential Impact on Market Activity
These changes could influence future housing prices if some landlords decide to sell their properties to mitigate tax exposure. However, analysts note that the immediate effect on overall market prices is likely to be modest.
Views from Property Experts
Jonathan Hopper, CEO of Garrington Property Finders, highlighted that while the Budget avoided the most severe tax hikes previously speculated, the rise in rental income tax could prompt small landlords to sell. This could increase the number of properties on the market in some areas, potentially placing downward pressure on prices.
Renewed Buyer Interest
Despite potential downward pressures, Hopper believes market activity could pick up as buyers who paused purchases ahead of the Budget return. He added that expected cuts to Bank of England interest rates could make mortgages more affordable, encouraging a stronger start to 2026.
Broader Fiscal Measures
Tom Bill, head of UK residential research at Knight Frank, noted that other Budget measures, such as the freezing of income tax thresholds, may help keep price growth in check. Property-specific taxes are unlikely to have a major short-term effect, but wider fiscal pressures could influence the market over time.
Nationwide’s Perspective
Robert Gardner, chief economist at Nationwide, said the Budget’s property tax changes are unlikely to cause significant disruption. He noted that the high-value council tax surcharge, starting in 2028, will affect fewer than 1% of properties in England and around 3% in London.
Outlook for Housing Affordability
Looking ahead, Gardner expects housing affordability to improve slightly if wage growth continues to outpace house price increases. He also mentioned that borrowing costs may ease if the Bank of England reduces interest rates further, providing additional support for buyers.
Market Resilience
Overall, while the Budget introduces new taxes for landlords and owners of high-value homes, analysts suggest the broader housing market is likely to remain resilient. Price growth is expected to remain modest, with potential increases in market activity as interest rates adjust and buyers return to the market.
Summary
In summary, house prices rose modestly in November despite ongoing uncertainty from the Budget. While new taxes may influence landlord behaviour and affect certain areas, the combination of slightly lower borrowing costs and returning buyer interest could keep the housing market relatively stable heading into 2026.
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