Surprise in month on month house prices rise suggests property market beginning to stabilise
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House prices in October were 0.9 per cent higher than in September, figures from lender Nationwide showed before the Bank makes its interest rate call tomorrow. .
Compared with October last year, prices were down 3.3 per cent, a less sharp fall than September’s 5.3 per cent drop, Nationwide said.
This comes after the Bank of England raised interest rates for 14 consecutive occasions in its battle against inflation, before holding on the previous, last month. All eyes will be on the Bank’s Monetary Policy Committee’s decision tomorrow.
Robert Gardner, Nationwide’s Chief Economist, said: “October saw a 0.9 per cent rise in UK house prices, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth to -3.3 per cent, from -5.3 per cent in September.
“Nevertheless, housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30 per cent below the monthly average prevailing in 2019.
He added, ahead of an expected hold by the Bank according to some economics, that: “With Bank Rate not expected to decline significantly in the years ahead, borrowing costs are unlikely to return to the historic lows seen in the aftermath of the pandemic.
“Instead, it appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim.”
Matt Thompson, head of sales at Chestertons, says: “The recent price adjustment that some of the property market has seen, led to more house hunters continuing their search in October with sellers receiving an increasing number of offers that month.
“The vast majority of buyers have accepted that interest rates are here to stay and, after readjusting their budget or search criteria, are no longer willing to delay their property search any further.”
Meanwhile, Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ’These figures, though historically reliable, only cover Nationwide’s customers and don’t include cash buyers who are active at present.
‘High mortgage rates and inflation may be compromising buyer demand but strong employment and shortage of properties for sale in areas of highest demand is keeping prices strong.’
Tom Bill, head of UK residential research at estate agent Knight Frank, added that: “sentiment in the UK housing market is weak but unlike the early months of Covid or the period following the mini-budget, there is no single cause.”
“The seasonal bounce in activity didn’t happen this autumn, although price falls have been kept in check by weak supply. We expect UK prices to fall by seven per cent this year and four per cent next year as inflation comes under control and mortgage rates stabilise.”
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Surprise in month on month house prices rise suggests property market beginning to stabilise