UK house prices rose slightly in October, according to Nationwide’s latest house price index, with annual growth edging up to 2.4% from 2.2% the previous month.

Prices increased by 0.3% on a seasonally adjusted basis, leaving the average home valued at £272,226.

Robert Gardner, Nationwide’s chief economist, said the housing market had “remained broadly stable in recent months”, with activity levels comparable to those seen before the pandemic.

“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck,” he said.

Gardner added that affordability could improve modestly in the coming quarters if wage growth continues to outpace house prices and borrowing costs ease as expected. “This should support buyer demand, especially since household balance sheets are strong,” he said.

RENOVATIONS REMAIN POPULAR

Nationwide’s research also revealed that kitchen and bathroom upgrades remain the most common home improvements among UK homeowners, with 71% having carried out either or both in the past five years. More than two in five (42%) added a new bathroom or ensuite, while one in four (25%) installed an additional toilet.

Around a third (34%) made “green” improvements, most commonly by adding solar panels. The trend was particularly strong among younger homeowners, with 69% of those aged 25 to 34 who had undertaken renovation work including some form of environmental improvement. By contrast, only 18% of homeowners aged 55 or above had made green upgrades, favouring bathroom refurbishments instead.

The most common motivation for renovation was aesthetic, with 54% of respondents saying they wanted to make their property look nicer. A further 35% aimed to increase its value, while just 7% were preparing a property for sale.

ADDING VALUE THROUGH SPACE

Nationwide’s analysis suggests that structural changes such as extensions and loft conversions can have a significant impact on property values. Expanding a home to include an additional bedroom can add as much as 24% to its value, the lender found.

Gardner said that while location remained the most important factor influencing house prices, increasing space continued to be one of the most reliable ways for homeowners to add value.

CAUTIOUS OPTIMISM

Market commentators said October’s figures reflected a cautious return of confidence after a difficult year. Karen Noye, mortgage expert at Quilter, said the modest rise “hints at resilience in the face of persistent economic uncertainty”. She added: “With the Budget looming and rumours swirling about possible housing tax changes, many buyers are taking a cautious approach, waiting to see whether the goalposts are about to shift.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said falling swap rates had given lenders scope to reduce pricing. “The market is a little quieter as some adopt a ‘wait and see’ approach, but lenders remain keen to lend and have the funds to do so,” he said.

Tomer Aboody, director of specialist lender MT Finance, said stamp duty remained a significant drag on market activity. “The high cost of moving is putting off many from doing so, choosing to stay put and improve existing homes instead,” he said.

“Stamp duty in particular is a barrier to mobility and further underlines the case for the Chancellor to take action in her Budget to reduce or reform it.”

While activity remains subdued, the latest data suggest that the housing market has stabilised, supported by modest price growth, a steady flow of mortgage lending and resilient demand despite higher borrowing costs.