Nationwide Building Society said UK house prices rose just 0.5% in the year to October, the slowest annual pace in more than two years. The average UK property price was £273,566, unchanged from September, as higher borrowing costs kept buyers cautious.
0.5% annual growth in October followed 0.8% in September, a step down that lines up with mortgage costs that have tightened through the autumn. The average cost of a five-year fixed-rate mortgage hit 6% for the first time in three years this month, while the average five-year fixed-rate mortgage stood at 5.99% on Thursday and the average two-year rate at 5.97%.
Robert Gardner on weaker demand
Robert Gardner said: “Surveyors report that new buyer inquiries remain weak.” He added: “Consumer sentiment dipped noticeably in October, with households becoming less confident about the outlook for the general economy as well as their own financial situation in the year ahead.”
0.5% annual growth also sits uneasily beside the Bank of England’s unchanged base rate at 3.75% since last December. Even without a policy move, mortgage pricing has climbed far enough to squeeze affordability, and expectations were growing that the MPC would vote next week to increase the rate to 4%.
Tom Bill on rising mortgage costs
£4.7bn is the size of the Your First Home scheme John Healey set out for first-time buyers who do not have access to the bank of mum and dad. Tom Bill said: “The impact of rising mortgage costs eclipses any support measure announced in this week’s budget.”
That leaves asking prices under pressure to adjust to the current financing environment. Tom Bill said: “The absence of major shocks from the chancellor may produce a modest relief bounce in coming months. However, asking prices will need to reflect the much tougher financial landscape that buyers face.”
Pantheon Macroeconomics on 2025
Rob Wood said the government’s new scheme could provide a “modest boost” to the market, but he also said prices were likely to remain subdued next year. For buyers, the immediate hurdle is clear: mortgage payments are still being set by rates close to 6%, not by the latest annual house price figure.
