Rachel Reeves could be about to throw a spanner in the works despite a surge in house prices last month, which leaves property value just one point below an all-time high, experts fear.

According to the Nationwide Building Society, the average UK house price rose by 1.2% month-on-month in November, with property values now standing just 1% below an all-time high.

Annual house price growth also surged, rebounding to 3.7% last month from 2.4% in October. This marks the fastest annual increase since November 2022.

However, referring to the Chancellor’s financial statement at the end of October, Stephen Perkins, Managing Director at Yellow Brick Mortgages, warned: “This is an extremely positive set of figures, with house prices now only 1% below their all-time peak.

“However, as the impact of the Budget and forthcoming increases in inflation feed through, price growth may begin to taper off.

He added: “These figures highlight how a lack of progress on new build numbers is supporting values. Scarcity of stock and supply will always support house prices. That certainly appears to be the case here.”

Andrew Montlake, Managing Director at Coreco, commented: “To say this rise in house prices is surprising is an understatement. November saw a material drop-off in demand as rates went north following the October 30 fiscal event.

“Before the Budget, there was the prospect of two rate cuts before the end of the year as inflation was sub-2%. But once the markets deemed the tax changes announced in the Budget to be inflationary, fixed-rate mortgage pricing started to rise almost immediately, impacting demand.”

Mr Montlake cautioned: “With inflation subsequently rising to 2.3%, the December rate cut borrowers had been hoping for now appears unlikely.

“There is still life in the property market, and the looming stamp duty deadline is driving a number of transactions, but things are nowhere near as busy as they were and could have been.”

Daniel Hobbs, Managing Director at New Leaf Distribution claimed Ms Reeves’ Budget had delivered a “hammer blow” to the confidence of buyers, meaning many woud be a “little bemused by such strong house price growth last month”.

He explained: “During November, much of the momentum in the market disappeared as mortgage rates went north.

“Transactions won’t drop off a cliff due to the stamp duty deadline next year, but things are now noticeably quieter as people digest the impact of the Budget on their finances.”

Ken James, Director at Contractor Mortgage Services, said: “The Budget butchered the market, so this data is a big curveball. Over the summer, the market was showing signs of resurgence, but the Budget popped the balloon.

“It’s a slow road back but with time hopefully we can get there. Rates will remain higher than we expected and it’s hard to see the market not slowing down as we move into the new year.”

The average house price across the UK in November was £268,144.

Nationwide’s chief economist Robert Gardner commented: “House prices increased by a robust 1.2% month-on-month, after taking account of seasonal effects, the largest monthly gain since March 2022. House prices are just 1% below the all-time high recorded in the summer of 2022.

“The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.”