House price growth slows to 0.5% in October – Nationwide

Annual UK house price growth fell to its weakest since January 2024 in October, with prices barely higher than a year earlier.

Month on month, they did not move at all after seasonal adjustments.

Nationwide’s latest figures put annual growth at 0.5%, down from 0.8% in September.

The average price before seasonal adjustment was £273,566, compared with £274,251 the previous month.

Mortgage pricing under pressure

The lender’s chief economist, Robert Gardner, 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.”

He added: “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.”

In the short term, he says, house prices look set to decline further with weak demand from home buyers.

Housing affordability gains remain

Mr Gardner pointed to an economy that has proved resilient so far, with annual growth accelerating in recent quarters.

Employment and real incomes are holding up well, he said.

Household debt remains close to its lowest level in 20 years relative to disposable income.

Higher market interest rates have only partly reversed the improvement in housing affordability over the past two years, as incomes have continued to grow considerably faster than house prices.

Property sector reaction to Nationwide house price index

Tom Bill, the head of UK residential research at Knight Frank, said: “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.”

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “The impact of the Middle East war on mortgage rates and inflation has been well documented but the period leading up to the Budget covered by these figures added a further layer of uncertainty.

“Word in our offices is that buyers and sellers who have recently paused decision-making now have a clearer idea of what the near-term at least will bring so are slowly resuming activity, albeit cautiously.”

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “House price growth continues to slow as higher mortgage rates and affordability constraints impact the price buyers are able or willing to pay.

“The government’s plans to help first-time buyers via its new scheme unveiled in the Budget are welcome but they will have to wait until the spring to take action. Unfortunately, it seems unlikely that on its own it will be enough to boost the transactions and activity the market needs.”

Nigel Bishop of Recoco Property Search said: “The property market hasn’t experienced an Autumn bounce this year as the lack of buyer activity continued in October with sellers attracting far fewer offers than they had hoped for.

“Some had no choice but to reduce their asking price.”