House price growth at weakest in nearly three years – Nationwide
Average house prices in the UK increased 0.5% year-on-year in October, a slower rate of growth than the previous month.
Nationwide’s house price index showed the average value of a home in the UK stood at £273,566, 0.3% lower than September’s figure of £274,251.
The annual pace of house price growth was also at its weakest since January 2024.
Robert Gardner, chief economist at Nationwide, said the slowing of market activity in recent months reflected the uncertain economic backdrop caused by “geopolitical tensions… fanning inflation concerns”.
Gardner said that “this in turn has led to mounting financial market expectations of bank rate increases, which have maintained upward pressure on the market interest rates which underpin mortgage pricing.”
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A softer market for now
Gardner said market insight suggested the housing market would continue to be soft in the near term, as surveyors reported weak new buyer enquiries and lower consumer confidence.
He added: “Once the energy shock fades, there are good reasons to believe the market will regain momentum. The broader economy has proven surprisingly resilient to date, with annual economic growth accelerating in recent quarters. Employment is holding up well, as are real incomes, while household balance sheets are solid, with debt levels still close to 20-year lows relative to household disposable income.
“Moreover, the improvement in housing affordability seen over the past two years has been only partially unwound as a result of higher market interest rates, as income growth has continued to outpace house price growth by a wide margin.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the market was “highly sensitive” and anticipation ahead of the Budget added “another layer of uncertainty”, so it was not surprising that prices had softened.
Leaf added: “Word in our offices is that buyers and sellers who have recently paused decision-making now have a clearer idea of what the near-term at least will bring, so are slowly resuming activity, albeit cautiously.”
Tom Bill, head of UK residential research at Knight Frank, said: “With both main house price indices hovering around zero and mortgage approvals down by almost a fifth versus last year, the toll of the Middle East conflict on the UK housing market is more obvious with each passing month.
“The impact of rising mortgage costs eclipses any support measure announced in this week’s Budget, although the absence of major shocks from the Chancellor may produce a modest relief bounce in coming months. However, asking prices will need to reflect the much tougher financial landscape that buyers face.”
