Housing market remains weak despite monthly price rises - Nationwide

Nationwide has cautioned property market commentators about being too optimistic as its own house price index showed average prices surprisingly rose between September and October and declines slowed annually.

The latest Nationwide House Price Index found UK house prices rose by 0.9% month on month in October to £259,423.

That compares with a 0.1% rise in September.

Prices were still down annually at 3.3% but that is an improvement on the 5.3% decline registered in September.

Robert Gardner, Nationwide's chief economist, said housing market activity remains weak  and suggested the uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained and there is little sign of forced selling so far.

He said: “Activity and house prices are likely to remain subdued in the coming quarters. Despite signs that cost-of-living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.

“With the bank rate not expected to decline significantly in the years ahead, borrowing costs are unlikely to return to the historic lows seen in the aftermath of the pandemic.

“Instead, it appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim.” 

Nicky Stevenson, managing director of Fine & Country, said all eyes will now be on the Bank of England’s interest rate decision today.

She said: “If interest rates continue to hold steady at 5.25%, it would instil much-needed confidence and encourage market stability.

“The decision also sparked competition among mortgage lenders, who have been cutting their repayment rates in response. For first-time buyers with limited deposits and cash reserves, this has been a welcome move and could encourage more to step onto the property ladder.

“If we see another pause in rate rises, it should provide an extra boost to Autumn sales, as sellers recognise this as a prime listing opportunity."