The October Nationwide House Price Index shows that UK house prices have had the biggest monthly rise for more than a year.
The month saw an unexpected 0.9% rise according to the building society’s report, most likely as a result of a shortage of houses driving up demand. Despite the rise, the average house price is still significantly lower than this time last year and market activity still remains low as high mortgage rates continue to deter buyers.
October saw property prices fall annually by 3.3%, while the previous month witnessed a 5.3% drop according to Nationwide.
“Sky-high borrowing costs and the continued squeeze on household incomes forces some to delay buying plans because they are unable to secure a mortgage,” said Alice Haine, an analyst at investment platform Bestinvest.
Robert Gardner, chief economist at Nationwide, said that borrowing costs would likely stay high but affordability would gradually improve.
He said: “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.”
Speaking about the monthly house price rise, Guy Gittins, CEO of Foxtons, said: “There continues to be opportunities for buyers in the current market as reduced demand and lower available stock have created an environment where house prices are not growing at rates seen over recent years in London.”
The cost of borrowing remains comparatively high when viewed against historic low levels but buyers and investors can still find good finance deals when working with a professional broker. This will be especially important for first-time buyers or those with smaller deposits.”
“All eyes will be on the Bank of England this week and the latest decision with regard to the base rate. A decision to hold, or even reduce, interest rates is unlikely to generate a dramatic uplift in market activity, especially with Christmas fast approaching, but it will add confidence to the market ahead of January.”
CEO of Yopa, Verona Frankish, commented: “An increase in the monthly rate of house price growth, however incremental, demonstrates that the nation’s homebuyers still have an appetite to transact, even in tough market conditions.”
“Of course, higher borrowing costs continue to dampen the market to an extent, with fewer buyers taking the plunge and property values remaining off the record pace set last year.”
“However, it appears as though the recent decision to freeze interest rates has helped boost market confidence and with the potential of a reduction on the cards this week, we could see a stronger finish to the year than many would have previously anticipated.”
Chris Hodgkinson, managing director of House Buyer Bureau, said: “House prices may have cooled when compared to the highs of last year, but all things considered, the market has weathered the storm rather well.”
“The real issue facing home sellers today isn’t necessarily the price they can achieve, it’s whether or not they have the patience to achieve it.”
“Buyer numbers have dropped quite drastically and so finding a genuine buyer is the name of the game in the current market. For those who can wait it out, the chances of securing a fair price are good.”
“However, for many, the far longer time spent on the market has been the driving factor behind their decision to reduce their asking price expectations in hopes this will entice more interest.”
