(fxcue news) - UK house prices increased at the fastest pace in two years in November underpinned by low unemployment and strong income gains, data from the Nationwide Building Society showed on Monday. House prices grew 3.7 percent on a yearly basis in November after rising 2.4 percent in October. This was the strongest growth since November 2022 and also exceeded the expected growth of 2.4 percent. Month-on-month, house prices climbed 1.2 percent, marking the biggest monthly gain since March 2022. This follows a marginal 0.1 percent rise in October. Data showed that house prices were just 1 percent below the all-time high recorded in the summer of 2022. Nationwide's Chief Economist Robert Gardner said the acceleration in house price growth was surprising as affordability remains stretched by historic standards with house prices still high relative to average incomes and interest rates well above pre-Covid levels. Gardner noted that the pickup in price growth was unlikely to have been driven by upcoming stamp duty changes, since the majority of mortgage applications commenced even before the Budget announcement. Despite the higher interest rate environment, housing market activity remained resilient in recent months, added Gardner. "Gauging the underlying strength of the market will be more difficult in the coming months as the upcoming stamp duty changes will provide an incentive for buyers to bring forward house purchases to avoid paying additional tax," the economist said. This will lift transactions in the first three months of 2025 and weaken the activity in the following three to six months, as occurred in the wake of previous stamp duty changes, Gardner said. Moreover, this has the potential to shift the demand and supply balance in the near term and impact price movements. However, the economist concluded that the underlying pace of housing market activity is set to continue to strengthen gradually as affordability constraints ease through a combination of moderately lower interest rates and earnings outpacing house price growth, provided the economy continues to recover steadily.