British house prices continued to climb in October, surprising economists and signaling steady demand ahead of finance minister Rachel Reeves’ upcoming budget, which is expected to include

tax hikes, according to data released Friday by lender Nationwide.

Nationwide reported a 0.3% monthly increase in its house price index, following a 0.5% rise in September. On an annual basis, prices were 2.4% higher than a year earlier, an acceleration from September’s 2.2% gain.

Economists surveyed by Reuters had anticipated no monthly change and a 2.3% annual rise, undershooting the actual figures.

Robert Gardner, Nationwide’s Chief Economist, noted that the market’s performance is notable given weak consumer confidence, signs of softening in the labor market, and mortgage rates that remain more than double their pre-pandemic levels, with prices still near record highs.

Fresh data from the Bank of England on Wednesday showed mortgage approvals in September exceeded expectations, supporting the view of resilient demand. Still, other indicators have pointed to cooling momentum, with some analysts attributing the slowdown to buyer caution ahead of Reeves’ November 26 budget.

Gardner added that affordability may improve gradually if wage growth continues to outpace rising property values, in line with Nationwide’s outlook. He also suggested that borrowing costs could ease further if the Bank of England cuts interest rates again in the coming quarters.

“This should bolster buyer demand, especially as household finances remain robust,” Gardner said, noting that the ratio of household debt to disposable income is now at its lowest level in 20 years.