- UK house prices rose 0.9% in October
- However, they were 3.3% below the previous year’s value and 5.23% below the August 2022 peak
According to Nationwide, property prices remained above expectations last month, rising 0.9 percent.
This is a significant increase from the marginal 0.1 per cent growth recorded in September and could suggest that house prices may not be falling as much as some forecasters have predicted – although Nationwide said they were likely to be “muted will remain.
The index showed property prices fell 3.3 percent compared to October last year.
House prices also remain 5.23 per cent (£14,328) below their peak in August 2022, before mortgage rates began to rise.
In October, property prices rose by 0.9%, taking seasonal effects into account. However, property prices are still down 3.3% over the last year
The average house price rose from £257,808 in September to £259,423 in October, according to Nationwide’s latest house price index, which is based on its own mortgage lending.
Nationwide attributed the monthly price increase to the fact that fewer homes were coming onto the market, increasing competition for those that do.
Yesterday, official data from HMRC showed that the number of homes sold fell by 17 per cent in September compared to the same period last year.
Data from the Bank of England also showed that mortgage borrowing for home purchases continued to fall in September, with activity falling by more than a third compared to the same period in 2022.
Earlier this week, Zoopla revealed that house price declines had spread across the UK, with 80 per cent of local areas recording annual falls.
While earlier this month the latest survey from the Royal Institution of Chartered Surveyors (Rics) showed that estate agents were overwhelmingly seeing prices falling.
Surprising increase: House prices in the UK fell slightly year-on-year
Robert Gardner, chief economist at Nationwide, said higher mortgage rates would hamper the housing market.
‘“Market interest rates, which underlie mortgage pricing, have moderated somewhat but are still well above the lows that prevailed in 2021,” he said.
“Activity and property prices are expected to remain subdued in the coming quarters.
“Despite signs that cost of living pressures are easing and inflation is now below the rate of average income growth, consumer confidence remains weak and surveyors continue to report subdued inquiries from new buyers.”
“The increase in property prices in October most likely reflects the fact that the supply of properties on the market is limited.”
Anthony Codling, UK property market analyst and managing director at RBC Capital Markets, said: “House prices rose unexpectedly in October, although this is likely to reflect a lack of supply rather than an increase in demand.”
“Supply constraints play into the hands of homebuilders who have homes to sell, and rising rather than falling prices in the broader market will ease some of the pressure on non-price incentive levels.”
“We expect property market conditions to remain subdued for the remainder of the year, but today’s property price news suggests it’s not all doom and gloom.”
Nationwide’s index also showed that house prices are becoming more affordable compared to average earnings
Jonathan Hopper, managing director of estate agent Garrington Property Finders, expects buyer interest to increase in the coming months.
He said: “As prices have fallen across all regions, more buyers are starting to look beyond mortgage rates to the money they can save on price.”
“Price reductions remain widespread, particularly for new construction in areas with abundant supply.”
“With average wage increases now outpacing inflation, improving affordability is likely to encourage more prospective buyers to shy away from purchasing – although any offer continues to take into account the risk that prices have not yet bottomed out.”