Annual house price growth has slowed again in October, falling to its slowest pace since January 2024, according to the latest Nationwide House Price Index.
The data shows that UK annual price growth dropped to 0.5%, down from 0.8% in September. On a monthly basis, prices remained unchanged after a 0.3% fall the previous month. The average UK house price now stands at £273,556.
Robert Gardner, Chief Economist of Nationwide, said: “Market activity and house price growth have slowed in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns.”
“This in turn has led to mounting financial market expectations of Bank Rate increases, which have maintained upward pressure on the market interest rates which underpin mortgage pricing.”
Looking ahead, Nationwide warns that there are signs of further softness in the near term, with surveyors reporting that new buyer enquiries remain weak. It also suggests that consumer sentiment dipped noticeably in October, as households are becoming less confident about the outlook for the general economy as well as their own financial situation in the year ahead. However, Nationwide’s report finds that there may be more positive movement around the corner.
Robert Gardner continued: “Once the energy shock fades, there are good reasons to believe the market will regain momentum. The broader economy has proven surprisingly resilient to date, with annual economic growth accelerating in recent quarters. Employment is holding up well, as are real incomes, while household balance sheets are solid, with debt levels still close to 20-year lows relative to household disposable income.”
“Moreover, the improvement in housing affordability seen over the past two years has been only partially unwound as a result of higher market interest rates, as income growth has continued to outpace house price growth by a wide margin.”
Jason Tebb, President of OnTheMarket, commented: “The continued softening in annual house price growth suggests needs-based buyers proceeding with their moves are price sensitive and negotiating hard.”
“Market resilience is still evident, despite wider geopolitical issues creating uncertainty, along with higher mortgage costs. The Bank of England’s decision to hold interest rates throughout this year has helped affordability and confidence, but there are fears that rising inflation may finally force its hand at next week’s meeting, with the first rate rise this year.”
“The Budget delivered targeted support for first-time buyers, but there wasn’t much else of consequence to really boost activity in the market. That said, softening prices should assist with housing affordability as income growth continues to outpace house-price growth, which in turn could boost momentum as we move into the spring.”
Jonathan Hopper, CEO of Garrington Property Finders, commented: “On a national basis, we’re in soft landing territory. But parts of the runway remain very bumpy.”
“Two sentiment-led factors combined to keep prices stuck firmly in a rut over the past month: uncertainty over the Budget and the high cost of borrowing. The Budget may be behind us, but the affordability pressures remain.”
“Supply and demand are doing the rest. In much of southern England, buyers are spoilt for choice and sellers have to compete hard just to get viewings, let alone a sale. Buyers who can easily walk away to another suitable property have little reason to stretch themselves to meet a seller’s optimistic asking price.”
“When deals are struck, the negotiation is increasingly about pricing tomorrow’s risks as well as today’s value. The buyers who do proceed will want the price they pay to reflect the possibility that their new home could be worth less in the short term. A lower purchase price cannot eliminate that risk, but it can provide some protection against it.”
“No one now expects the Bank of England to ease the pressure on mortgage interest rates when its Monetary Policy Committee meets next week. As a result, we expect this cautious, negotiation-led market to continue over the coming months.”
“Those who need to move are still moving, and many longer-term buyers are prepared to take a pragmatic view of near-term volatility. They are buying somewhere to live for years, not trying to trade the next monthly house price figure.”
“That longer horizon gives buyers a reason to proceed. But it does not give sellers a licence to overprice.”
