UK House Prices Rise in October, Showing Resilience Ahead of Budget
British house prices rose in October, according to data from lender Nationwide, defying expectations and signaling continued demand in the property market ahead of Finance Minister Rachel Reeves’ upcoming budget, which is expected to include potential tax increases.
Nationwide reported that its house price index climbed 0.3% month-on-month in October, following a 0.5% increase in September. On an annual basis, prices were 2.4% higher than a year earlier, compared with a 2.2% rise in September.
Economists surveyed by Reuters had predicted no monthly change and a smaller 2.3% annual gain, making October’s result stronger than expected.
Housing Market Defies Weak Confidence and High Mortgage Rates
Nationwide’s Chief Economist Robert Gardner said the data showed remarkable resilience despite subdued consumer confidence and a softening labour market. He noted that mortgage rates remain more than double their pre-pandemic levels, while house prices are still close to record highs.
Data from the Bank of England also reflected stronger activity, showing that mortgage approvals in September came in higher than expected.
However, other indicators have pointed to a slight slowdown in price growth in recent months. Analysts attribute this to homebuyer caution ahead of Reeves’ budget announcement scheduled for November 26.
Outlook: Gradual Improvement in Affordability
Gardner added that housing affordability may improve modestly if income growth continues to outpace house price increases, as Nationwide anticipates.
He also suggested that borrowing costs could ease if the Bank of England decides to lower its benchmark interest rate in the coming quarters.
“These factors should support buyer demand, especially as household balance sheets remain strong,” Gardner said, noting that the ratio of household debt to disposable income is now at its lowest point in two decades.
