House prices rose 0.1% month-on-month in October, Nationwide’s latest House Price Index has revealed.
The average home now cost approximately £265,738 throughout the month, a slight decrease from £266,094 the month prior.
In addition, the annual growth rate slowed to 2.4% in October, from 3.2% in September.
Robert Gardner, chief economist at Nationwide, said: “The price of a typical UK home increased by 2.4% year on year in October, though this represented a modest slowdown from the 3.2% pace recorded the previous month.
“House prices rose by 0.1% month on month in October, after taking account of seasonal effects.
“Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment.”
He added: “Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.
“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Reaction:
Nathan Emerson, CEO of Propertymark:
“As the wider economy has become more settled, it’s encouraging to witness greater affordability and confidence flow through the housing market.
“With strong hints we may see a steady reduction in base rates implemented over the coming months, there is substantial scope to round the year with an upbeat tone to be carried forward into 2025.
“However, it is important to acknowledge the potential impact the budget may have on first time buyers from next April onwards, as the current Stamp Duty threshold is lowered back to £300,000.
“In real terms, this could mean an additional tax expenditure of £6,250 for those hoping to start their property journey with a house priced at £425,000.”
Mark Harris, chief executive of SPF Private Clients:
“Competition among lenders to offer cheaper mortgage rates has boosted housing market activity.
“Many buyers were waiting for rates to come down before taking action and with hopes that the Bank of England will move again and cut rates next week, this will further encourage those who may be wavering.
“Swap rates rose on the back of the Budget but this could be a knee-jerk reaction rather than a sustained period of higher rates.
“Only time will tell – if swaps remain at elevated levels for a while, lenders may have to increase their mortgage rates.
“Lenders have been repricing this week – some increasing rates, others reducing pricing in order to attract new business.
“Borrowers looking for a mortgage should speak to a whole-of-market broker to find the best deal available to them.”
Amy Reynolds, head of sales at Antony Roberts:
“House prices seem to be holding steady, with only moderate shifts in value.
“However, the market is marred by some uncertainty among buyers, leading to an increase in properties coming back on the market after fall-throughs.
“These fall-throughs are often due to buyer nervousness, which in many cases is unrelated to the property itself but rather a reflection of economic uncertainty and tightening financial conditions.
“With the Budget not as dramatic as feared from a property perspective, the ‘wait and see’ approach we have seen from some buyers, who have been more cautious than usual given the economic backdrop, will hopefully now ease.
“For now, demand remains and most properties are successfully re-agreed and sold after returning to the market.
“Demand for prime London locations is historically resilient; buyers may pause to reassess financial implications, but high-demand areas are likely to retain interest.”
Karen Noye, mortgage expert at Quilter:
“The latest Nationwide House Price Index for October indicates that house prices have slightly risen.
“There will be another interest rate decision announced next week, which will potentially play a part in helping mortgage rates lower further.
“However, just the stability in mortgage rates that buyers have enjoyed over the last few weeks has helped renew confidence and get buyers back out into the market.
“The market reaction to Reeves’ spending plans will determine whether rates will fall as fast as previously thought as this could cause there to be more uncertainty about the speed of rate cuts with some of the measures potentially inflationary.
“The Budget also brought in substantial changes that could have far-reaching effects on the housing sector and property prices.
“The Government has increased the additional stamp duty surcharge for second homes from 3% to 5%, effective immediately.
“This is aimed at discouraging buy-to-let investors and second-home buyers, potentially reducing competition for primary homes.
“However, this could also worsen the shortage of rental properties, further driving up rents, especially in cities where demand remains strong.
“For first-time buyers, there’s added urgency. The Budget confirmed that the temporary Stamp Duty threshold of £425,000 will revert to £300,000 in March 2025.
“With this deadline looming, we might see a rush of activity as prospective buyers try to complete purchases before the higher tax kicks in this could hike up prices.”
Jeremy Leaf, North London estate agent and a former RICS residential chairman:
“The number of sales agreed has increased steadily since base rate was reduced in the summer, as have mortgage approvals.
“However, the increase in stock, particularly from landlords who have had their fill of tax and regulatory issues, will worsen.
“We expect the Budget will increase demand for smaller properties as first-time buyers seek to profit from investors unwilling to pay higher taxes before stamp duty rates rise early next year.”
Tomer Aboody, director of specialist lender MT Finance:
“Another slight increase in monthly house prices is further demonstrating the confidence which has been felt with a lower rate environment, on the back of some good inflation numbers.
“With mortgage rates at more affordable levels, borrowers will be further incentivised to take the plunge, especially in the wake of Rachel Reeves’ Budget, which could possibly lead to higher rates.”
Marc von Grundherr, director of Benham and Reeves:
“A slower rate of house price growth was always to be expected during a Budget month as the housing market pauses for breath to see what the Government has up its sleeve, but despite this, the market still recorded positive growth on both a monthly and annual basis which demonstrates just how far we’ve come so far this year.
“Whilst there were no positive Budget initiatives announced that will supercharge market activity, we do expect to see a heightened level of activity between now and March of next year, as homebuyers scramble to complete before stamp duty relief reverts back to previous thresholds.”
Ed Phillips, CEO of Lomond:
“Stability has been the key component to the returning health of the UK housing market and so it’s no surprise that the rate of house price growth slowed during October, with the property sector enveloped by Autumn Statement uncertainty.
“Now that the dust has settled and the property market has escaped largely unscathed, we expect the rate of growth seen across the market to once again accelerate, particularly with further cuts to interest rates on the cards.”
Verona Frankish, CEO of Yopa:
“House prices have held firm during Budget month which is an impressive performance in itself despite the rate of growth seen falling month on month.
“The impending Stamp Duty relief deadline in March of next year will certainly light a fire under those buyers currently progressing through the transaction process, or considering a purchase this side of Christmas.
“However, whilst many will be keen to transact before stamp duty thresholds increase, it certainly won’t cause a cliff edge for the housing market come next year.
“Stamp Duty has long been a thorn in the side of homebuyers but not one that is significant enough to deter them from their aspirations of homeownership.
“In fact, the prospect of further interest rate cuts and the increase in long-term mortgage affordability that these will bring are far more likely to influence buyer ambitions and help keep the housing market moving forward.”
Nicky Stevenson, managing director at Fine & Country:
“House prices held steady in October, and early reaction to the Budget seems optimistic that the Chancellor’s changes will not disrupt the market’s growth.
“There has been a notable resurgence in confidence among buyers, driven by positive economic indicators that have bolstered the market throughout the year.
“The favourable backdrop of lower interest rates and stabilising inflation has encouraged many to view the property market as a stable investment.
“It will take some time to see the full effect of the Autumn budget announced by Labour this week.
“The wealthy and multiple-home owners will be the hardest hit by these tax raises. In particular, the recent 5% Stamp Duty surcharge has added an extra layer of consideration for second-home buyers.
“But in the days following the announcement, we have observed that most of the clients in our network have chosen to move forward with their purchases.
“This demonstrates the continued strength and resilience of the property market, even in the face of additional costs. Buyers remain motivated to complete transactions, which shows confidence in the value of their investments.
“Interestingly, we’ve seen cases where the new surcharge has encouraged buyers to reconsider their property portfolios. In one instance, a buyer opted to sell their primary residence to reclaim the surcharge, signalling a flexible approach to navigating these new costs.
“Looking ahead, there is potential for another base rate cut from the Bank of England this month, which could help alleviate any setbacks resulting from the budget and contribute to a strong finish for 2024.”
Jonathan Hopper, CEO of Garrington Property Finders:
“The late summer heat enjoyed by Britain’s property market is cooling fast.
“In part the slowdown in price rises is a side-effect of the post-election surge in activity.
“The rush of sellers putting their home on the market in early autumn means that many buyers now find themselves spoilt for choice and able to negotiate hard on the price they pay.
“When buyers hold the cards like this, price inflation tends to be kept in check.
“But there are other more worrying factors at play too. Anxiety about what this week’s Budget might hold cooled activity sharply in October, especially at the top end of the market.
“Many of the estate agents we work with saw the number of viewings halve as buyers opted to wait and see.
“And then there’s the mortgage market, which has veered off the script that many wrote for it after the Bank of England first cut its Base Rate in August.
“Even if the Bank does announce another rate reduction next week, many mortgage lenders are having to push up the rates they offer to new borrowers.
“More expensive, rather than cheaper, mortgages will not ease the fragile sentiment.
“The fallout from the Chancellor’s decision to impose higher Stamp Duty on anyone buying a second home or a buy-to-let property could now cool the market further.
“While pragmatists will reflect that the tax raid could have been worse, the market spent much of October in the brace position and not everyone is ready to come out of it yet.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“As we come into the closing months of the year, we’re increasingly seeing the telltale signs of a market in recovery.
“House prices, property sales and mortgage approvals are all showing resilience and stability in the face of continued cost-of-living challenges.
“While the pace of house price growth has slowed, there was a marginal increase in October, which should still come as welcome news to the industry.
“It is also another reminder that the frenzy of activity that we saw during the pandemic era is now a distant memory.
“The annual rate of growth may begin to slow in the coming months, as we will be comparing to a time when the market was recovering from the disastrous mini-Budget of 2022.
“Mortgage approvals are up to pre-pandemic levels which is very encouraging news and will be welcomed by estate agents and their clients.
“Buyers are still finding suitable mortgages despite the prevailing high interest rates.
“While sellers would no doubt like to see house prices climb faster, they need to remain realistic on asking prices.
“Buyers will still be looking to haggle for a bargain, especially if they have struggled to save for a deposit in recent times.
“There are healthy levels of housing stock on the market, so sellers should expect some competition.”
