The United Kingdom’s housing market experienced a modest increase in house prices during the month of October, according to data released by Nationwide’s Monthly Index. The report indicates a 0.9% month-on-month rise in house prices, marking a positive shift from the near-stagnant growth recorded in September. However, despite this recent uptick, prices remain 3.3% lower compared to October of the previous year.
The seasonally adjusted figures show that the Monthly Index climbed from 512.8 in September to 517.2 in October, resulting in an average house price of £259,423 for the month, up from £257,808 in September.
Robert Gardner, Nationwide’s chief economist, offered a tempered outlook on the situation. He mentioned, “October saw a 0.9% rise in UK house prices, after accounting for seasonal effects. This resulted in an improvement in the annual rate of house price growth to -3.3%, from -5.3% in September.”
Gardner acknowledged the ongoing sluggishness in the housing market activity and noted that only 43,300 mortgages were approved for house purchases in September, a figure approximately 30% below the monthly average in 2019. “This is not surprising as affordability remains stretched,” Gardner emphasized.
Market interest rates, which influence mortgage pricing, have somewhat moderated but remain higher compared to the lows of 2021. Gardner suggested that the October rise in house prices is likely due to constrained supply, with little evidence of forced selling that could otherwise drive prices downward.
The data also points to continued softness in the housing market, with consumer confidence remaining low and a lack of new buyer inquiries, as reported by the Royal Institution of Chartered Surveyors (RICS) for October.
Gardner concluded that it seems unlikely that borrowing costs will return to the historic lows seen in the aftermath of the pandemic. Instead, he predicts that a combination of solid income growth, along with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim.