UK house prices rise at fastest rate since January
UK house prices edged higher in October, rising at the fastest pace since January as buyer demand remained high despite market uncertainty.
Prices increased by 0.6 per cent last month, marking the fourth time in five months the average price has increased, following a sharp 0.3 per cent drop in September, according to the latest Halifax house price index.
The typical price of a property hit a record high of £299,862, while annual growth also increased by 1.9 per cent.
The rise in costs comes as mortgage approvals also hit the highest levels this year-to-date.
The capital remained the most expensive region of the UK, despite prices falling on annual basis of 0.3 per cent, with the average property costing £542,273.
Nathan Emerson, chief executive of Propertymark said: “Any rise in house prices is a welcome sign of growing confidence in the UK housing market.
“It suggests that demand remains strong and that recent economic adjustments are beginning to bear fruit.”
Affordability remains a challenge
While increasing prices can indicate growing homebuyer wealth, in particular at the upper end of the market, not all buyers can afford the high prices.
Amanda Bryden, head of mortgages at Halifax, said: “There is no doubt that affordability remains a challenge for many.
“Average fixed mortgage rates are currently around four per cent and likely to ease down further, but with property prices at record levels, moving homes can feel like a stretch.
“Rising costs for everyday essentials are also squeezing disposable incomes, which affects how much people are willing or able to spend on a new property.”
But Bryden noted that buyers have been resilient in the face of expensive property price tags, opting for smaller deposits and longer terms in attempts to offset costs.
With house prices also rising more slowly than incomes, Halifax expects the trend of “gradually improving affordability to continue.”
Meanwhile, the Bank of England’s decision to hold interest rates at four per cent also provides a boost to the market, with some industry figures seeing the decision as likely to help sales.
Jason Tebb, president of Onthemarket, said: “Yesterday’s hold in rates for the second consecutive month, while not delivering the further reduction borrowers would have wanted, does suggest a stability in the market which is encouraging.
“With the vote extremely close, and further reductions expected, this should help improve affordability, stimulate the market and encourage activity into the new year.”
Budget fears
However, some areas of the market are feeling the pressure of growing speculation around property taxes as the November Budget creeps closer.
Rumours of a ‘mansion tax’ have grown louder in recent weeks, with the Chancellor understood to be looking at an annual one per cent charge on the amount a property’s value exceeds £2m.
Other floated changes include a reform of the stamp duty regime and national insurance being introduced onto landlords’ rental incomes.
Tom Bill, head of UK residential research at estate agent Knight Frank, said: “Stable mortgage rates have supported demand in recent months and the bank rate is now on a downward path.
“But a tax-raising Budget will curb buying power and weigh on sentiment, keeping a lid on housing market activity next year.”