"Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually"
- Robert Gardner, Nationwide's chief economist
UK house prices rose 0.1% month-on-month in October, down from 0.6% in September, while annual growth slowed to 2.4% from 3.2%, according to the latest Nationwide house price index.
Robert Gardner, Nationwide's chief economist, said: “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."
Rachael Hunnisett, director of April Mortgages, commented: “The UK housing market is continuing its steady recovery despite growth slowing compared with last month.
“Overall, the market remains in a strong position with mortgage approvals at a two-year high and a modest uptick in housing transactions.
“Recent house price gains are partly a result of rising consumer confidence following a drop in interest rates and reduced pressure on household budgets.
“However, the Chancellor’s Autumn Budget has put the cat back among the pigeons with the OBR suggesting that interest rates may stay higher for longer as a result of her plans.
“This is not the news that homebuyers will have been hoping for and could have an impact on the strength of the housing market’s recovery in the coming months."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “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."
Jonathan Hopper, CEO of Garrington Property Finders, added: "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.”
