House prices increase in October, but remain lower than a year ago

Experts react as UK house prices rose by 0.9% month on month in October.

October saw a 0.9% 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%, from -5.3% in September.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “Nevertheless, housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019."

Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: "House prices showed signs of recovery in October, finally gaining back some momentum after the summer lull and boosted by a pause in interest rates.

“The Bank of England's surprising decision to hold off on a rate hike in September was a relief for hesitant buyers, who were waiting for economic stability before committing to a purchase.

“All eyes will be on tomorrow's announcement to see if the pause was a fleeting respite. If interest rates continue to hold steady at 5.25%, it would instil much-needed confidence and encourage market stability.

“The decision also sparked competition among mortgage lenders, who have been cutting their repayment rates in response. For first-time buyers with limited deposits and cash reserves, this has been a welcome move and could encourage more to step onto the property ladder.

“If we see another pause in rate rises tomorrow, it should provide an extra boost to autumn sales, as sellers recognise this as a prime listing opportunity."

Jonathan Hopper, CEO of Garrington Property Finders, comments: “Springtime this is not, but there are tentative signs of thawing in the property market.

“Official data shows the number of homes sold in September was down 17% on the same time last year, and buyers remain deeply price sensitive, but Nationwide’s data suggests 2023’s price correction may finally be easing.

“With the Bank of England expected to hold interest rates steady again tomorrow and average mortgage rates creeping down, the combination of better value homes – and the borrowing needed to buy them – could give the market a welcome lift as the nights draw in.

“While thus far it has been cash buyers who’ve capitalised most on falling house prices, greater clarity on interest rates should bring more mortgage-reliant buyers back into play.

“There’s an increasing realisation that while a mortgage rate isn’t for life, the purchase price you pay is for the lifetime that you own a property. With prices down across all regions, more buyers are starting to look beyond mortgage rates at the money they can save on the price.

“Price cutting remains widespread, especially for new-build homes in areas with abundant supply. But pragmatic sellers who adapt to the recalibrated market with more realistic asking prices could be the first to benefit from stabilising buyer demand.

“With average wage rises now outstripping inflation, improving affordability should bring more would-be buyers out of the woodwork – even if every offer made will continue to factor in the risk that prices haven’t yet bottomed out.”

Iain McKenzie, CEO of The Guild of Property Professionals, says: “This time last year, the Chancellor was still doing damage control over the disastrous effects of the so-called ‘Mini Budget’. Homeowners and prospective buyers alike have both felt its impact over the past year.

“Today’s figures show there is some light at the end of the tunnel for sellers, with a modest increase in prices after months of sluggish growth.

“The average home still costs almost £9,000 less than it did this time last year according to Nationwide, but this readjustment in prices had been on the horizon for some time, as property values showed unprecedented growth throughout 2021 and 2022.

“Homeowners should feel reassured that their home is still worth significantly more than it did prior to the pandemic, and we are starting to see steady growth return once again."