UK house prices recorded a modest increase in November, rising 0.3 per cent to reach an average value of £272,998 despite elevated mortgage rates and uncertainty surrounding the government’s forthcoming budget. Annual growth eased to 1.8 per cent from the previous month, yet the market’s stability has surpassed expectations at a time when borrowing conditions remain tight and broader economic sentiment is mixed.
Analysts attribute the steady performance to firmer household confidence, supported by a labour market that, while gradually softening, continues to provide enough security to underpin housing demand. Expectations of eventual interest rate cuts have also helped sustain buyer activity, even as affordability remains stretched for many households. Estate agents report that momentum has been strongest among buyers seeking mid-priced homes, a segment less exposed to tax changes and typically more responsive to signs of stabilisation in lending conditions.
The new fiscal measures outlined in the budget add complexity to the outlook. A mansion tax on properties valued above £2 million from April 2028, alongside higher taxes on rental income due to take effect a year earlier, is expected to affect only a small share of the market. However, the tighter regime may discourage some landlords from investing or retaining properties, potentially reducing rental supply and intensifying pressure on rents, especially in London and other high-demand urban areas.
Looking ahead, the trajectory of mortgage rates will remain the key determinant of both affordability and sentiment. While lower rates could support continued price growth, the combined effects of tax changes, landlord retrenchment and wider economic uncertainty may constrain supply and limit upward momentum. The coming year will test the market’s ability to balance modest demand with shifting fiscal conditions and evolving affordability pressures.
