British house prices reached a new peak in October, although the 0.2% increase from September marked the slowest monthly growth in the last three months. Mortgage lender Halifax reported

that demand could remain subdued if interest rates decline slowly and taxes for home buyers increase.

The rise in house prices matched the median forecast from a Reuters survey of economists.

Year-on-year, house prices in October were 3.9% higher, which was also the slowest annual growth since July. This slower pace coincided with the period when the Labour Party gained power in a national election and issued warnings of economic challenges ahead, impacting consumer confidence.

Halifax stated that the average house price reached a record 293,999 pounds ($380,288), slightly surpassing the previous peak of 293,507 pounds in June 2022. This previous record occurred as the Bank of England (BoE) was increasing interest rates and just before the ‘mini-budget’ crisis that sharply drove up mortgage rates.

Amanda Bryden, head of mortgages at Halifax, noted that despite the pressure from higher interest rates, house prices have largely stabilized since mid-2022, increasing by only 0.2% over that period.

Bryden added that the potential for the BoE to reduce interest rates more gradually than anticipated and the increase in property taxes outlined in the government’s recent budget could impact future demand.

“While we expect house prices to continue to grow, the pace will likely remain modest for the rest of this year and into next year,” she said.

The BoE is expected to lower its benchmark interest rate at 1200 GMT on Thursday for only the second time since 2020. However, following last week’s budget announcement—which included higher-than-expected borrowing and spending plans—investors are now anticipating fewer rate cuts between now and the end of 2025.