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Annual house price growth eased slightly last month but was still just under 10 per cent, the Nationwide has reported.
Its monthly House Price Index puts the average price of a house at a tad over £250,000, £30,000 more than in March 2020 before the Coronavirus Pandemic.
Prices rose 0.7 per cent on the month, 0.5 per cent higher than in September.
‘Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September’, said Nationwide’s chief economist Robert Gardner.
‘Mortgage applications remained robust at 72,645 in September, more than 10 per cent above the monthly average recorded in 2019. Combined with a lack of homes on the market, this helps to explain why price growth has remained robust.
‘The outlook remains extremely uncertain. If the labour market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences as a result of the pandemic to continue to support activity’.
But, said Gardner, there are a number of factors that suggest the pace of activity may slow. ‘It is still unclear how the wider economy will respond to the withdrawal of government support measures. Consumer confidence has weakened in recent months, partly as a result of a sharp increase in the cost of living.
‘Even if wider economic conditions continue to improve, rising interest rates may exert a cooling influence on the market, though the impact on existing borrowers is likely to be modest’.
The share of outstanding mortgages on variable interest rates (and which are therefore likely to see an increase in payments if the Bank Rate is increased) has fallen to its lowest level on record, Gardner pointed out. Now only about one in five mortgages are variable rate.