House prices in the UK experienced a modest rise of 0.1% in October, significantly slowing from September’s 0.6% monthly increase, according to mortgage lender Nationwide on Friday.
Despite the deceleration, the housing market has shown resilience and is projected to gain momentum as borrowing costs decrease.
Reuters economists had predicted a 0.3% monthly rise in house prices. Annually, prices were up 2.4% compared to October last year, marking a softer increase than September’s 3.2% annual gain and falling short of the 2.8% growth expected in the Reuters poll.
Robert Gardner, Nationwide’s chief economist, noted the market's resilience and forecasted stronger activity as interest rates drop. The Bank of England is anticipated to reduce borrowing costs next Thursday, with further cuts expected in 2025.
Additionally, a temporary tax incentive for home-buyers, set to expire at the end of March 2025 and confirmed in finance minister Rachel Reeves' first budget this week, is likely to boost demand in early 2025.
“However, the swings in activity are likely to be somewhat less pronounced, in this instance, given that the stamp duty reduction has been in place for some time and its planned expiry was well known,” Gardner stated.
He also mentioned that an increase in the higher rate of stamp duty for second homes could curb demand for buy-to-let properties.