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UK house prices rose 0.3% in the past month, beating expectations and marking continued resilience in the housing market ahead of Finance Minister Rachel Reeves' budget, according to Nationwide. Prices were up 2.4% year-on-year, accelerating from 2.2% in the previous month, while economists had predicted no monthly change. Chief Economist Robert Gardner said the market's strength was notable despite high mortgage rates and soft consumer confidence. The Bank of England reported stronger-than-expected mortgage approvals, and Gardner suggested affordability could improve if income growth outpaces prices. With household debt at a 20-year low and borrowing costs likely to ease, the housing market appears stable but cautious ahead of fiscal policy announcements.
British house prices registered a rise during the past month, according to data from lender Nationwide, surpassing economists' expectations and suggesting persistent demand in the housing sector ahead of Finance Minister Rachel Reeves' forthcoming budget, expected to feature tax hikes. Nationwide's house price index increased by 0.3% on a monthly basis, following a 0.5% rise in the previous month. Annually, house prices were up by 2.4%, accelerating from the 2.2% growth recorded earlier. Advertisement
Economists surveyed had predicted no monthly change and an annual growth of around 2.3%. Nationwide's Chief Economist, Robert Gardner, stated that, despite weak consumer confidence and signs of a softening labour market, the housing market's performance showed resilience. He noted that this strength was notable given that mortgage rates remained more than double their pre-pandemic levels and house prices were near historic highs.
Data released by the Bank of England earlier in the week indicated that mortgage approvals for September exceeded expectations. However, other market indicators have hinted at a cooling in price momentum in recent months, largely due to buyer caution ahead of Reeves' upcoming budget. Gardner observed that housing affordability could improve modestly if income growth continued to outpace property price increases, in line with Nationwide's forecasts.
He further mentioned that borrowing costs might ease slightly should the Bank of England reduce its benchmark rate in the coming quarters. Gardner added that this could bolster buyer demand, supported by the relatively strong state of household finances, with the ratio of household debt to disposable income currently at its lowest in two decades.
The latest data from Nationwide indicated that Britain's housing market remains steady despite persistent headwinds such as high mortgage rates and subdued confidence. With household balance sheets in good shape and the potential for borrowing costs to ease, moderate improvements in affordability could sustain buyer interest. The market's direction in the months ahead will likely hinge on income trends and the fiscal measures announced in Rachel Reeves' forthcoming budget.
Source - Reuters
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