UK house prices declined at the slowest pace in nine months in November as expectations of interest rate cuts in future eased affordability pressures, the mortgage lender Nationwide Building Society said Friday.

House prices registered an annual decline of 2.0 percent after easing 3.3 percent in October. Prices marked the slowest fall since February 2023. They were forecast to drop 2.3 percent.

On a monthly basis, house prices rose 0.2 percent in November, slower than the 0.9 percent rise in October and confounded economists' forecast of 0.4 percent drop.

Nationwide Chief Economist Robert Gardner said there has been a significant shift in market expectations for the future path of interest rates, if sustained, this could provide much needed support for housing market activity.

These shifts in expectations have led to a decline in longer-term interest rates that underpin fixed rate mortgage pricing, the economist said.

"While mortgage rates are unlikely to return to the lows prevailing in the aftermath of the pandemic, modestly lower borrowing costs, together with solid rates of income growth and weak/negative house price growth, should help underpin a modest rise in activity in the quarters ahead," Gardner added.

Nonetheless, Gardner said a rapid rebound still appears unlikely. Cost-of-living pressures are easing and inflation is staying below the rate of average wage growth.

However, consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries.

Moreover, there are still upward risks to interest rates though markets are projecting that the next Bank Rate move will be down.

The Bank of England had kept its key interest rate unchanged at 5.25 percent at November and September meetings, snapping a streak of 14 consecutive rate hikes.

The rate was lifted by a cumulative 515 basis points since December 2021.

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