Latest movement in house prices surprises some experts
The average price of a UK house rose by 1.1% or almost £3,000 to £281,974 in October compared to the previous month, Halifax has reported.
The latest rise in house prices ended the streak of six consecutive monthly falls, surprising some industry experts.
However, house prices are still down by 3.2% year on year, though the decline was at a slower pace than the 4.5% annual fall recorded in September.
“Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale,” Kim Kinnaird, director at Halifax Mortgages, commented on the latest Halifax House Price Index. “This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall.
“While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers. Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s base rate soon, we expect house prices to fall further overall – with a return to growth from 2025.
“The current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
Meanwhile, Malcolm Davidson, director at Hull-based mortgage broker UK Moneyman, admitted that few expected that house prices would return to growth again at this time.
“The property market has once again showed its ability to surprise,” he said. “I’m not seeing many buyers sitting on their hands waiting for property values to fall, but some are certainly still waiting for the return of lower fixed rate mortgages.
“But given that the Bank of England has stated twice in the past three months that interest rates are likely to remain high until inflation is well and truly behind us, that could well be a long wait.”
For Rich Horner, head of individual protection at insurance firm MetLife, the latest rise in house prices may see buyers pause on immediate purchase plans this year.
“With major lenders forecasting UK house prices will continue to slide this year, and not start to recover until 2025, there may be less activity ticking over for the foreseeable,” he pointed out. “However, that doesn’t remove the considerations around higher mortgage and rent payments – both of which are continuing to dominate the lion-share of millions of people’s take-home pay.”
Alex Lyle, director of Richmond estate agency Antony Roberts, added that while there is a good level of stock available, anything coming onto the market now needs to be priced at the right level as there is no depth of demand in terms of enquiries compared with the start of the year.
“Our business is all about confidence, and two consecutive holds in interest rates are extremely welcome, helping buyers plan for the future,” Lyle said.
“Transactions are taking time and negotiations can be drawn out. But there are opportunities for buyers who are brave enough not to sit on the fence with an autumn window where competition is more muted and vendors more realistic.”
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