UK House Prices Rise Surprisingly in October Despite Economic Uncertainty

House prices in the United Kingdom climbed more than expected during October, offering fresh evidence of resilient demand against a backdrop of economic and political uncertainty. Nationwide’s latest house price index revealed average prices increased by 0.3 per cent over the month, following a 0.5 per cent rise in September. On an annual basis, prices are now up 2.4 per cent, a slight improvement from the 2.2 per cent annual growth reported in the previous month.

This upward movement in property prices came as a surprise to most economists, who had forecast neither a monthly change nor an annual increase beyond 2.3 per cent. The Bank of England’s most recent data also highlighted robust market activity, with 65,944 mortgages approved in September—the strongest figure since December 2024 and comfortably above market expectations.

These figures stand in contrast to other measures of the housing sector indicating slowing momentum. The Royal Institution of Chartered Surveyors reported a ‘state of semi-paralysis’ in the market, noting a continued decline in new buyer enquiries, sales, listings, and prices in September. Many commentators link this cautious sentiment to speculation over possible property tax reforms in the coming November budget.

Chancellor Rachel Reeves has emphasised that increased taxation for the wealthy will form a central part of the next budget, prompting worries that new property levies could be introduced. Nevertheless, data suggests homebuyers are less deterred by the possibility of tax hikes than previously thought. Market analysts believe some buyers may be delaying decisions until greater clarity emerges, yet the underlying demand remains robust.

Housing affordability could improve marginally should income growth continue to outpace house price rises. Borrowing costs are similarly expected to ease, with Goldman Sachs predicting that the Bank of England will reduce its base rate to 3.75 per cent. Any such cut could provide tailwinds to buyer demand in the months ahead.

Despite labour market uncertainties and subdued consumer confidence, the property market’s resilience suggests a solid underpinning for UK house prices heading into the final quarter of the year. The coming budget will prove pivotal in shaping the housing landscape for 2026 and beyond.