The UK property market experienced a minor resurgence in October with house prices showing a 0.9% monthly increase. However, compared to the same month last year, prices are still down by 3.3%, bringing the average house price to £259,423.
Nationwide’s Chief Economist, Robert Gardner, provided insights on this situation: “October saw a 0.9% rise in UK house prices, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth to -3.3%, from -5.3% in September. Nevertheless, housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019. The uptick most likely reflects constrained supply, with little sign of forced selling due to solid labour market conditions and historically low mortgage arrears. However, activity and house prices are likely to remain subdued in the coming quarters.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, explained how a shortage of property for sale propped up house prices: “A dearth of property for sale has underpinned house prices in October, as sellers sat on their hands. But this small bump isn’t a sign of a price resurgence round the corner. Higher mortgage costs are denting enthusiasm to buy, and it may take more substantial rate cuts to stimulate demand significantly.”
Guy Gittins, CEO of Foxtons, emphasized opportunities for buyers due to reduced demand and lower available stock, while also mentioning the potential impact of the Bank of England’s decisions on the base rate.
CEO of Yopa, Verona Frankish, noted: “An increase in the monthly rate of house price growth, however incremental, demonstrates that the nation’s homebuyers still have an appetite to transact, even in tough market conditions. The recent decision to freeze interest rates has helped boost market confidence.”
James Forrester, Managing Director of Barrows and Forrester, remarked on the previous decision to freeze interest rates, stating that it “hasn’t been enough to relight the touchpaper with respect to current market performance, albeit it has spurred a marginal monthly increase in property values.”
Marc von Grundherr, Director of Benham and Reeves, observed that the property market is in a state of limbo, while Chris Hodgkinson, Managing Director of House Buyer Bureau, pointed out that “the real issue facing home sellers today isn’t necessarily the price they can achieve, it’s whether or not they have the patience to achieve it.”
These statements reflect a cautious outlook for the property market, with factors such as interest rates, borrowing costs, and market demand playing significant roles in shaping future developments.
Nationwide has published its House Price Index for October 2023: House prices increase in October, but remain lower than a year ago
