UK House Price Growth Slows as Buyers Await Budget Decisions

House price growth across the UK decelerated in October, as buyers adopted a cautious approach ahead of the upcoming budget and potential new property taxes. According to Nationwide, the average price of a home increased by a modest 0.3 percent month-on-month, with the figure rising to £272,226 from September’s £271,995.

Annually, house price growth edged up to 2.4 percent compared with the previous year’s figure, a slight improvement from the 2.2 percent rate posted in September. However, analysts note that, while prices remain at near record levels, the market’s resilience is being tested by economic uncertainty and speculation surrounding property tax changes in the chancellor’s 26 November budget.

Despite reports pointing to slower sales particularly at the higher end of the market, there has been ongoing stability in the overall number of properties coming to market, according to figures from Rightmove. However, the typical “autumn bounce” in asking prices failed to materialise this year, reflecting a more subdued sentiment among homebuyers.

Mortgage rates remain substantially higher than those preceding the Covid-19 pandemic, with current rates more than double those seen five years ago. Yet, the Bank of England’s recent rate cut in August, and expectations of another reduction soon, have provided some support to market activity. Suppliers and estate agents remark that lower borrowing costs are helping to underpin price stability for now.

Nationwide’s chief economist, Robert Gardner, observed that despite muted consumer confidence and signs of softening in the labour market, the housing market has exhibited broad stability throughout recent months. The number of mortgage approvals has matched pre-pandemic levels, suggesting an underlying resilience in housing demand.

Improvements in affordability could be on the horizon if income growth continues to outpace house price increases and should borrowing costs ease further. However, the imminent budget and any resulting property tax announcements will be key factors shaping buyer behaviour and market dynamics in the short term.