UK house prices steady in October as annual growth slows to 0.5%
Key Facts
Nationwide said on 30 October that UK house prices were unchanged month on month in October after seasonal adjustment, following a 0.3% decline in September. At the same time, annual price growth slowed to 0.5% from 0.8%, its weakest pace since January 2024. The divergence between the two readings points to a market that recorded no fresh monthly decline but continues to lose momentum year on year. The seasonally unadjusted average price was 273,566 pounds sterling, compared with 274,251 pounds in September. The company partly linked the slowdown in activity and price growth to the uncertain economic backdrop.
Nationwide said financial market expectations of an interest rate increase had kept upward pressure on the market rates underpinning mortgage pricing. This comes as the Bank of England’s official rate stands at 3.75%, after the Monetary Policy Committee voted 6 to 3 in September to keep it at that level. The three dissenting members voted for an increase of 0.25 percentage points to 4%. MoneyWeek reported that most economists expect a rise to 4%, but this remains an expectation attributed to them, not an announced decision. Consumer price inflation also rose to 3.5% in the 12 months to September, from 3.1% to August, according to figures cited in the report.
Nationwide said geopolitical tensions and the conflict in the Middle East were pushing up energy prices and fuelling inflation concerns, among the factors adding to economic uncertainty. In its September minutes, the Bank of England had pointed to a rise in global energy prices since its July Monetary Policy Report, with spot Brent crude up 36% and UK wholesale gas up 78% over the period cited. At the close on 14 September, Brent stood at 106 dollars a barrel, while UK wholesale gas reached 207 pence per therm. On inflation, the bank said the annual rate was 3.1% in August and forecast it would rise in coming quarters, while monetary policy remained directed at returning it sustainably to the 2% target. September data then showed inflation rising to 3.5%, with fuel and transport among the largest contributors to the increase.
Housing indicators showed mixed readings for asking prices and recorded prices. In Rightmove’s survey covering 13 September to 10 October, asking prices rose 1% from the previous month, after a 0.7% increase in the prior period; however, the rise remained below the October average of 1.3%. Agreed sales fell 8% compared with their level a year earlier. Rightmove’s property expert said higher mortgage costs had begun to weigh on affordability even in lower-priced areas. The average two-year fixed mortgage rate rose to 5.55% in October from 5.29%, compared with 4.25% in February before the war in Iran broke out.
In official data that lag the Nationwide index, the average UK house price was 273,000 pounds sterling in August, up 0.9% annually, after growth of 1.2% in July. London recorded the weakest annual performance among English regions, with prices falling 2.2% in the 12 months to August and flat prices down 5.0%. Supply indicators showed new properties listed for sale rose 1% in September from August, but were down 1% from September of the previous year. The average time a listed property remained on the market was also 69.3 days. These readings add to the picture of a slowing market, alongside the continued weakness in new buyer inquiries cited by surveyors in Nationwide’s report.
Nationwide said forward-looking indicators pointed to further weakness in the near term, and surveyors reported that new buyer inquiries remained weak as consumer confidence fell in October. The company’s chief economist added that the market could regain momentum once the energy shock subsides, pointing to the resilience of the economy, employment, real incomes and household balance sheets. He said: "Once the energy shock fades, there are good reasons to believe the market will regain momentum." The next focal point is the Monetary Policy Committee meeting scheduled for 5 November. The Bank of England will publish the meeting summary and minutes, along with its Monetary Policy Report, that day, while the current interest rate remains at 3.75% until the decision is announced.