(Bloomberg) -- UK house prices rose for the second month in a row, according to one of Britain’s biggest mortgage lenders, in a further sign that a lack of properties for sale and cheaper borrowing costs are underpinning the property market.

Halifax said the average value of a home rose 0.5% in November to £283,615 ($356,120), following an upwardly revised 1.2% gain in October. It left prices just 1% lower than a year earlier and roughly 3.5% below where they peaked in 2022.  

The figures confirmed a separate report from Nationwide Building Society that also showed prices rising in November. It adds to the evidence that a crash in the the UK housing market may not materialize as thought.

“The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand,” said Director of Halifax Mortgages Kim Kinnaird. “Recent figures for mortgage approvals suggest a slight uptick in activity levels.”

She said mortgage rates have eased, and this is also helping buyer confidence. 

Indicators which showed house prices falling for much of 2023, after strong growth in the aftermath of the pandemic, have begun to stabilize in recent months. The Bank of England’s decision to pause its string of interest rate hikes has helped bring mortgage costs down, while a stronger-than-expected labor market means few homeowners are being forced to sell.

The central bank yesterday said fewer British households than previously thought will struggle to meet their mortgage payments, suggesting a limit to defaults on home loans and support for the property market.

Some 440,000 households will find it difficult to meet their debt repayments by the end of 2024, as defined as having a higher mortgage cost of living adjusted debt-servicing ratio. That’s down substantially from its July estimate of 650,000 by the end of this year and much lower than levels seen in the financial crisis. 

Overall, the household debt to income ratio was 139% in 2023, the lowest level since 2002. That reflects rising real incomes and efforts by households to reduce their debt.

All of this has reduced downward pressure on house prices and left a shortage of supply as the key factor driving the market. UK property prices have defied expectations that prices could drop as much as 10% this year.

The resilience is partly because unemployment — while beginning to rise — has remained lower than many expected, despite a string of 14 consecutive rate hikes from the BOE. 

However the BOE is expecting 2024 to be a year of stagnation for the UK economy, leading economists to suggest that the housing market is now in its “slow puncture” phase.

Over the last year, Northern Ireland has been the strongest performing region with a rise in house prices of 2.3%. Property values in Scotland have remained flat, while in Wales — one of the fastest-growing regions in the aftermath of the pandemic — they fell by 1.5%.

The yearly fall was steepest in the South East of England at 5.7%, while London — though still the most expensive region with properties averaging £524,592 — recorded a fall of 3.8%.

--With assistance from Irina Anghel.

(Updates with details from the report and context.)

©2023 Bloomberg L.P.