There has been a mixed industry response to the latest data revealing that annual house price growth slowed in October, down to 2.4% from 3.2% in the previous month.
According to Nationwide Building Society, UK house prices rose 0.1% month on month in October.
It also that stated that the average price of a UK home in October was £265,738.
Robert Gardner, Nationwide’s chief economist, 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.
“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.
Industry reaction:
Tom Bill, head of residential research at Knight Frank, said: “We expect this year’s house price recovery to come under pressure following the increase in borrowing costs triggered by the Budget. How much depends on the reaction of bond markets in coming days and the Bank of England’s rate decision and comments next week. It appears a ‘mini-Budget’ moment has so far been avoided.”
Nicky Stevenson, MD at Fine & Country, said: “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.”
Myles Moloney, area sales manager at Chase Buchanan, said: “At the beginning of October we saw continued buyer confidence which was boosted by favourable mortgage rates and a greater number of properties being put up for sale. As we were nearing the Autumn Budget, however, house hunters and sellers grew more cautious.”
Marc von Grundherr, director of Benham and Reeves, commented: “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.”
Iain McKenzie, CEO of The Guild of Property Professionals, commented: “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. If you’re selling a property, work with your estate agent to set a price that allows for some wriggle room.”
Ed Phillips, CEO of Lomond, commented: “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, commented: “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.”
Karen Noye, mortgage spokesperson at Quilter, added: “The latest Nationwide House Price Index for October indicates that house prices have slightly risen. House prices rose by 0.1% in October bringing the annual growth rate to 2.4%, which has slowed from 3.2% in September.
“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.”