UK house price growth slows as buyers ‘sit on sidelines’ before budget | Housing market

UK house price growth slowed in October, credit data shows; analysts suggest buyers are “sitting on the sidelines” ahead of a budget that could introduce new property taxes.

Nationwide said the median house price rose 0.3% month-on-month in October, down from 0.5% in September. The average price of a house rose to £272,226, up from £271,995 in September.

On an annual basis, house price growth increased slightly from 2.2% in September to 2.4% in October compared to 12 months ago.

The continued growth comes despite some reports of a slowdown in sales of more expensive homes, which could have been further addressed in the budget on 26 November.

Property listing website Rightmove also reported “elasticity” in the number of properties coming to market this month, but added there had been no usual “autumn bounce” in asking prices.

Anthony Codling, a residential construction analyst at RBC Capital Markets, an investment bank, said: “Home buyers are sitting on the sidelines waiting to see what next month’s budget brings.

“If the housing market is anything, it is resilient,” he added. “House prices are near all-time highs but mortgage rates are more than double what they were pre-Covid and the possibility of further rate cuts will support house prices.”

Treasury officials are considering introducing a new tax on the sale of homes valued over £500,000, but it remains to be seen whether Chancellor Rachel Reeves will choose to implement it.

Amy Reynolds, sales director at wealthy west London estate agent Antony Roberts, said the market was “stagnant, particularly at the top end”.

At the same time, low interest rates also helped support activity. The Bank of England last cut borrowing costs in August, and a new cut was expected at its meeting on Thursday.

Robert Gardner, Nationwide’s chief economist, said the market had shown broad stability in recent months, with continued increases in house prices and similar numbers of mortgages approved for home purchases as in the period before the coronavirus pandemic leading to wide fluctuations.

Stability was achieved despite economic conditions that may often be linked to falling prices, particularly borrowing costs that are much higher than they were five years ago.

“In an environment where consumer confidence is weak and there are signs of weakening in the labor market, this performance demonstrates resilience, particularly as mortgage interest rates are more than double their pre-Covid level and house prices are near all-time highs,” Gardner said.

Nationwide said it expects house affordability to improve modestly in the coming months if income growth continues to outpace house price growth and there is a further reduction in borrowing costs.