UK Property Market Shows Surprising Resilience
The UK housing market has demonstrated unexpected strength, with property prices rising at their fastest annual rate since January. According to the latest data from Halifax, a leading mortgage lender, house prices increased by 1.9% on an annual basis in October, comfortably beating economist forecasts which had predicted a more modest 1.5% rise.
Monthly Growth Reverses September Dip
The market's momentum was further highlighted by a robust monthly performance. After an unexpected 0.3% dip in September, prices rebounded with a 0.6% increase in October. This growth was significantly stronger than the 0.1% monthly rise anticipated by analysts in a Reuters poll. This upward push has elevated the average cost of a home in the UK to a new record high of £299,862, bringing it tantalisingly close to the £300,000 psychological threshold.
Amanda Bryden, Head of Mortgages at Halifax, part of Lloyds Banking Group, commented on the underlying demand. "Demand from buyers has held up well coming into autumn, despite a degree of uncertainty in the market," she said, noting that the number of new mortgage approvals has recently reached its highest level so far this year.
Budget Jitters and Future Prospects
This resilience is particularly notable given the ongoing uncertainty surrounding potential tax changes in Chancellor Rachel Reeves's upcoming budget on 26 November. Reports have suggested the government is considering replacing stamp duty with a new levy on the sale of homes worth more than £500,000, creating a 'wait-and-see' attitude among some buyers.
Estate agents have observed this cautious sentiment. Matthew Thompson, Head of Sales at Chestertons, stated, "October’s property market was noticeably calmer as many buyers have paused to see what the budget might bring." However, he anticipates a surge in activity post-budget, adding, "Once there is more clarity from the chancellor’s announcements, we expect buyer activity to pick up as those waiting on the sidelines re-enter the market."
Despite the positive price growth, affordability remains a significant challenge for many. Bryden pointed out that although average fixed mortgage rates are hovering around 4%, record-level property prices continue to make moving "feel like a stretch" for prospective homebuyers. The squeeze on disposable incomes from rising everyday costs further complicates purchasing decisions.
Nevertheless, the market has shown adaptability. "Even so, while there has been some volatility, the market has proven resilient over recent months, as many buyers opt for smaller deposits and longer terms to help make the numbers work," Bryden added. With house prices rising more slowly than incomes for almost three years, the trend of gradually improving affordability is expected to continue, offering a glimmer of hope for those looking to get on the property ladder.
