House prices rose by 0.9% on average month-on-month in October – likely reflecting a constrained supply of properties for buyers to choose from – according to an index.
Across the UK, property values fell by 3.3% compared with October last year, Nationwide Building Society said.
The average UK house price in October was £259,423.
Robert Gardner, Nationwide’s chief economist, said that despite the month-on-month rise in house prices: “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.”
He continued: “The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained.
“There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels.
“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 inquiries.”
Mr Gardner said that with the Bank of England base 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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While interest rates appear to have peaked, those hoping rates will move swiftly downwards again to the rock-bottom levels of the recent past are likely to be disappointed.
“Pricing is higher than borrowers have grown used to over the years, meaning those buyers relying on mortgages are more price sensitive on the back of ongoing affordability concerns.
“Swap rates, which underpin the pricing of fixed-rate mortgages, are trending down again after a recent blip.
"While the direction of travel for new mortgage rates is generally downwards, we have seen a few lenders pull rates in the past few days, although this has been primarily in order to slow business.”
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