UK house prices rise 0.3% in November, affordability likely to improve, Nationwide says

LONDON, Dec 2 (Reuters) - British house prices rose slightly faster than expected in November, defying concerns about the impact of finance minister Rachel Reeves' budget, and higher wages were improving affordability, mortgage lender Nationwide said on Tuesday.

House prices last month rose by 0.3% on a seasonally adjusted basis, taking the average to 272,998 pounds ($360,739.56), after a 0.2% increase in October, the figures from Nationwide Building Society showed

The annual rate of price growth slowed to 1.8% last month from 2.4% in October, the weakest level since June 2024. House prices surged by the most in two years last November, which economists at the time said reflected a reduction in interest rates by the Bank of England and Reeves first budget.

Economists polled by Reuters had forecast a 0.1% monthly increase and a 1.4% annual rise.

"We think that trend house price inflation should accelerate over the course of the next year now that the Budget is behind us ... the hard activity data on the housing market is holding up well, suggesting fundamental demand remains robust," Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said.

Data published by the BoE on Monday showed the number of mortgages approved by lenders in October came in higher than expected.

The BoE is widely expected to cut its main interest rate to 3.75% from 4% in December.

"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," Nationwide Chief Economist Robert Gardner said.

Some other recent gauges of the property sector have suggested a slowing in house price growth which has been attributed to caution among homebuyers in the lead-up to Reeves' November 26 tax and spend plan.

Gardner said a tax on expensive homes announced by Reeves last week, would not have a significant impact on the housing sector, but could dampen the supply of new rental properties coming onto the market.

($1 = 0.7568 pounds)

(Reporting by Suban Abdulla; editing by Sarah Young)