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, the society reported.
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.
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.
“Yesterday’s budget also brought in substantial changes that could have far-reaching effects on the housing sector and property prices. The government has increased the additional stamp duty surcharge for second homes from 3% to 5%, effective immediately. This is aimed at discouraging buy-to-let investors and second-home buyers, potentially reducing competition for primary homes. However, this could also worsen the shortage of rental properties, further driving up rents, especially in cities where demand remains strong.
“For first-time buyers, there’s added urgency. The budget confirmed that the temporary stamp duty threshold of £425,000 will revert to £300,000 in March 2025. With this deadline looming, we might see a rush of activity as prospective buyers try to complete purchases before the higher tax kicks in this could hike up prices.
“Additionally, the government’s £5 billion investment in housing, aimed at increasing the supply of affordable homes and boosting regeneration projects, is a positive step. However, the benefits of this funding will take time to materialise. In the meantime, the recent cut in the Bank of England’s base rate to 5% is expected to gradually stabilise fixed-rate mortgage costs, but those on tracker and standard variable mortgages are likely to feel the impact sooner.
With these ongoing challenges, the need for professional financial and mortgage advice is greater than ever. How the housing market evolves in response to these fiscal measures and economic changes will be pivotal in shaping the outlook for both buyers and homeowners.”
