UK house price growth cools as buyers wait for budget
UK house price growth slowed in October as potential buyers appeared to “sit on the sidelines” ahead of a budget that could introduce new property taxes, according to the latest lending data.
Nationwide reported that the average house price rose by 0.3% month on month in October, down from 0.5% in September. The typical home now costs £272,226, a slight increase from £271,995 the previous month. On an annual basis, growth edged up to 2.4%, compared with 2.2% in September, despite signs of cooling demand in parts of the market particularly among higher-value properties, which could face greater scrutiny when the chancellor delivers the 26 November budget.
Property listings platform Rightmove recently noted continued “resilience” in the number of homes coming to market, although it also highlighted the absence of the usual “autumn bounce” in asking prices. One industry expert suggested that many would-be buyers are delaying decisions until after the budget announcement, noting that although mortgage rates remain more than double their pre-Covid levels, the housing market has proved resilient, with prices still near record highs and the possibility of further rate cuts expected to offer support.
Slowdown comes as buyers hold off ahead of possible new property taxes in the November budget.
Treasury officials are reportedly considering a new tax on the sale of properties valued above £500,000, though it is still unclear whether the chancellor, Rachel Reeves, will introduce it. Another industry pundit noted that the market remains “sluggish, particularly at the higher end”, despite lower interest rates providing some support to activity. The Bank of England last cut borrowing costs in August, with another reduction expected this week.
Robert Gardner, Nationwide’s chief economist, said the market had shown “broad stability” in recent months, with steady growth in house prices and mortgage approvals close to pre-pandemic levels. Additionally, Gardner noted “Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience – especially since mortgage rates are more than double their pre-Covid level and house prices are close to all-time highs.”
Nationwide said affordability could improve modestly in the coming months if wage growth continues to outpace house price rises, supported further by easing borrowing costs.
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