UK house price growth slowed further in October, with annual prices rising just 0.5%, down from 0.8% in September, according to the latest nationwide house price index.
The latest figure represents the slowest annual rate of house price growth since January 2024, while prices remained unchanged on a monthly basis after seasonal adjustment.
Robert Gardner, Nationwide’s chief economist, said the slowdown in market activity and home price growth in recent months was partly a result of economic uncertainty.
“Geopolitical tensions remain high, with conflict in the Middle East putting upward pressure on energy prices, raising inflation concerns,” he said.
Gardner added that expectations of policy rate increases have put further upward pressure on market interest rates that support mortgage rates.
The outlook for the housing market also remains weak in the near term, with surveyors reporting weak new buyer applications and a decline in consumer confidence in October.
Gardner said households were becoming less confident about the broader economic outlook and their financial conditions over the coming year.
However, he believes there are reasons for optimism once the current energy shock begins to wear off.
“The broader economy has proven surprisingly resilient so far, with annual economic growth accelerating in recent quarters,” he said.
“Employment is holding up well, as are real incomes, while household balance sheets are strong, with debt levels still near twenty-year lows relative to household disposable income.
“Furthermore, the improvement in housing affordability seen over the past two years has only been partially impacted by rising market interest rates, as income growth has continued to outpace house price growth by a wide margin.”
Amy Reynolds, head of sales at Richmond estate agency Anthony Roberts, said: “Mortgage rates have been rising much faster than anyone expected since the spring, and buyers have changed the way they behave. People are choosing to borrow less and are being cautious about moving.”
“The anticipation of what might be in the Budget has undeniably slowed the market. Finally, we have some certainty, but the stamp duty reduction would have been a real help, and while the reduction of the mansion tax threshold has been postponed for now, fear of what might come to squeeze ordinary people has put the brakes on an already sluggish market. With interest rates expected to rise next week, fixed rate mortgages are unlikely to fall before Christmas, so December will be quieter than usual.”
