This morning’s Nationwide House Price Index shows that annual price growth slowed to 0.5% in October, following no growth in the month and the average house price at £273,566.
This is down from growth of 0.8% in September, with prices now rising at the slowest pace since January 2024.
Robert Gardner, Nationwide’s chief economist, said: “October saw a further slowing in UK annual house price growth to 0.5%, from 0.8% in September. That is the weakest growth since January 2024. Prices were flat month on month, after taking account of seasonal factors.
“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.
“Forward-looking indicators suggest further softness in the near term. Surveyors report that new buyer enquiries remain weak. Moreover, consumer sentiment dipped noticeably in October, with households becoming less confident about the outlook for the general economy as well as their own financial situation in the year ahead.
“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."
Tom Bill, head of UK residential research at Knight Frank. commented: “With both main house price indices hovering around zero and mortgage approvals down by almost a fifth versus last year, the toll of the Middle East conflict on the UK housing market is more obvious with each passing month. The impact of rising mortgage costs eclipses any support measure announced in this week’s Budget, although the absence of major shocks from the Chancellor may produce a modest relief bounce in coming months. However, asking prices will need to reflect the much tougher financial landscape that buyers face.”
Jonathan Hopper, CEO of Garrington Property Finders, said: “On a national basis, we're in soft landing territory. But parts of the runway remain very bumpy.
“After falling -0.3% in September, the value of an average home recorded zero growth on a monthly basis in October. The quarterly fall in value has also eased to -0.2%, but the annual pace of growth has slowed again.
“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.
“But even though it’s a buyers’ market, smart buyers are being disciplined. Just because a seller offers a discount off an ambitious asking price, that does not automatically make a home good value. Buyers are scrutinising the price they actually pay, rather than simply the size of the reduction on offer.
“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.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, added: “Mortgage rates have risen far faster than anyone expected since the spring, and buyers have changed how they behave. People are choosing to borrow less and are cautious about moving.
“Anticipation as to what might be in the Budget undeniably slowed the market down. Finally, we have some certainty, but a reduction in stamp duty would have been a real help and while a cut to the mansion tax threshold has been parked for now, fear of what else might come along to squeeze ordinary people has put the brakes on a market that was already slow. With a rate rise expected next week, fixed rate mortgages are unlikely to fall before Christmas, so December will be even quieter than usual."
