Shares in UK housebuilders rose this morning, with Persimmon PLC (LSE:PSN) and Taylor Wimpey PLC (LSE:TW.) leading the gains, after new data from Nationwide painted a steadier picture of the housing market.
The building society’s latest index shows the average home now costs £272,998, with annual growth slowing slightly to 1.8% from October’s 2.4%. Even so, prices rose 0.3% over the month — stronger than the 0.1% economists had expected.
Nationwide’s chief economist, Robert Gardner, said the market has been “resilient” despite challenges ranging from weak confidence to signs of cooling in the labour market.
Mortgage approvals remain close to pre-pandemic levels, and prices are still inching upwards even though borrowing costs are more than double where they stood before Covid.
Gardner also downplayed the impact of last week’s Budget changes. The new council tax surcharge on £2 million-plus homes, often labelled a mansion tax, affects only a tiny proportion of properties, though higher taxes on rental income could tighten supply in the rental sector.
Looking ahead, Nationwide thinks affordability should improve slowly if wages continue to grow faster than house prices, with potential relief to come if interest rates fall next year.
Some analysts believe November’s stronger-than-expected rise hints that buyers who delayed moves before the Budget may soon re-enter the market, giving activity a lift as the new year approaches.
Persimmon led the FTSE 100 with a 1.5% gain, while Taylor Wimpey, a FTSE 250 constituent, was up 1.9%.