UK house prices rose at their slowest rate since January 2024 in October, with annual growth falling to just 0.5 per cent compared with 0.8 per cent in September, according to Nationwide. The typical home is now worth £273,566, having fallen by £5,324 since April. Nationwide said this marks the weakest annual growth it has recorded since the start of 2024, with prices flat year-on-year.
Robert Gardner, chief economist at Nationwide, attributed the slowdown to several factors weighing on the market. He said the uncertain economic backdrop has dampened both market activity and house price growth in recent months. Geopolitical tensions remain elevated, with the conflict in the Middle East pushing energy prices higher and fuelling inflation concerns. This has led financial markets to expect bank rate increases, which has maintained upward pressure on the mortgage rates that underpin property prices.
Supply and demand dynamics are also shifting in buyers' favour. Homes for sale now outnumber families wanting to purchase them, creating a buyers' market. Jonathan Hopper of Garrington Property Finders noted that in much of southern England, buyers have plenty of choice and little incentive to meet sellers' asking prices. The Bank of England reported that mortgage approvals for house purchases fell to 53,400 in September, below an average of around 58,800 over the previous six months.
Industry experts expect conditions to worsen before improving. Mark Harris, chief executive of mortgage broker SPF Private Clients, warned that prices are likely to continue sliding as interest rates are set to rise and the Government's new Your First Home scheme will not launch until spring. The Royal Institution of Chartered Surveyors found that the majority of its members reported house prices were falling in their area during September, and the institution expects further declines over coming months as fewer buyers search for homes and fewer sales are agreed.
However, Gardner suggested the underlying economy remains resilient. He noted that annual economic growth has accelerated in recent quarters, employment is holding up well and real incomes are rising. Household balance sheets are solid with debt levels close to 20-year lows relative to household disposable income. He said that once the shock of higher energy bills fades, the market should regain momentum, particularly as the improvement in housing affordability seen over the past two years has only been partially reversed despite higher mortgage rates.
For homebuyers seeking a mortgage, whether for a purchase or because a fixed rate deal is ending, conditions remain challenging as mortgage rates have risen due to inflation expectations linked to international tensions. Those needing to borrow should explore their options promptly given the current market environment.