Houses prices surged higher last month following a two-month hiatus as consumer confidence returned, according to the latest survey from Halifax.
Following a flat performance in September and October, the bank's housing report showed a 2 per cent jump in November, the biggest monthly increase since September last year.
Halifax, Britain's biggest mortgage provider, blamed the 11 September terrorist attacks in the US for putting a sharp brake on the property market that month and in October.
Martin Ellis, group economist at Halifax, said: "The market was artificially depressed in September and October as consumer confidence was shaken. The [terrorist] attacks also diverted attention away from the process of buying a house."
The stronger-than-expected recovery meant the annual rate of house price inflation increased to 11.5 per cent in November, well up on the 9 per cent rise in the previous two months. The average selling price was £96,010 last month.
Mr Ellis said the figures showed the interest rate cuts since 11 September are keeping consumer confidence going and this was also supported by strong recent consumer high street spending data.
Looking forward however, Halifax is forecasting 2002 will see national house prices rises of just 5 per cent. It predicts the weakest markets will be in London and the South-east, due to redundancies and job security fears, and the much reduced City bonuses likely to be awarded in early 2002.
Richard Donnell, head of residential research at estate agents FPD Savills, said affordability remained high with mortgage payments at 23 per cent of household disposable income, especially outside London and the South-east.
"Interest rate cuts have pumped a lot of affordability into the market," he said.
If the economy turned out to be stronger than forecast next year, Mr Donnell said London prices could quickly return to high growth rates.Reuse content