House price growth slips back amid subdued buyer confidence, Nationwide says

UK house price growth has fallen month-on-month in October, according to figures from Nationwide Building Society, as experts said budget uncertainty and a cooling jobs market is weighing on buyer confidence.

Nationwide said UK house price growth fell month-on-month in October to 0.3% from 0.5% in September.

Property values lifted 2.4% on an annual basis, up from 2.2% year-on-year growth last month, taking the average UK house price to £272,226 in October, according to the lender.

Nationwide said the market remained “broadly stable”.

But experts said buyers are taking a “wait-and-see” approach ahead of the budget, amid mounting speculation over upcoming changes to property taxes, while wider economic worries and a weakening labour market is also holding the market back.

Elliott Jordan-Doak, a senior UK economist at Pantheon Macroeconomics, said house prices have remained subdued but are likely to continue rising slowly over the coming months.

He said: “We think that some homebuyers are taking a wait-and-see approach to the budget, which is weighing slightly on sentiment in the market.”

He added: “But the activity indicators holding up better than their survey-based signals suggests to us that demand remains robust.

“So, all told, we expect a pick-up in activity once the budget is passed and buyers have more certainty over policy.”

Lending figures from the Bank of England earlier this week showed approvals for house purchases rose to a nine-month high in September, as borrowing costs continued to ease.

Robert Gardner, Nationwide’s chief economist, said: “The housing market has remained broadly stable in recent months, with house prices rising at a modest pace and the number of mortgages approved for house purchase maintained at similar levels to those prevailing before the pandemic struck.

“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs.”

He said conditions should help support the property market over the months ahead.

Mr Gardner said: “Housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect.

“Borrowing costs are also likely to moderate a little further if bank rate is lowered again in the coming quarters.”

The Bank will announce its latest decision on interest rates next week and while most economists believe they will vote to hold at 4%, there are expectations for further reductions in light of recent better-than-expected inflation data.

Sarah Coles at Hargreaves Lansdown said: “There’s every chance that the market continues to stand its ground through the difficult winter months.

“Along with the fact that wages are rising faster than house prices, more than six months of falling mortgage rates will be helping convince buyers to take the plunge, and better deals that have emerged in the last week or so should help support the market too.”

HM Revenue & Customs (HMRC) data also out on Friday showed seasonally adjusted residential house sales lifted 1% between August and September to 95,980.

This was 4% higher than the same month last year.

Nick Leeming, chairman of estate agents Jackson-Stops, said the HMRC figures were “indicative of a housing market that has slowed in the run-up to the Budget, but remains fundamentally strong driven by lifestyle purchases”.

Jason Tebb, president of OnTheMarket, said HMRC data shows the market “continues to move in the right direction”.

But Zoopla noted some slowdown in sales agreed for properties valued at more than £500,000 due to Budget uncertainty, while Mr Leeming at Jackson-Stops said there was caution in the market for high-end properties worth more than £2 million “ahead of any possible tax reforms”.