House prices show the biggest monthly increase for more than a year
The month of October brings a lot of surprises, although the increase in house prices was a very unwelcomed one.
New data from Nationwide, the UK’s biggest building society, showed house prices unexpectedly increased in October by 0.9% – the biggest hike since August 2022.
The increase came as such a shock because the price of property’s had only risen a mere 0.1% in September. In addition, economists polled by Reuters, had expected prices to fall by a monthly 0.4% and by 4.8% year on year.
However, Nationwide’s chief economist, Robert Gardner, said the figures are ‘not surprising as affordability remains stretched.
‘Market interest rates, which underpin mortgage pricing, have moderated somewhat but they are still well above the lows prevailing in 2021.’
During the Covid-19 pandemic the housing market took off due to a surging demand for bigger properties, which, pushed prices by 25%, according to Nationwide. Although, when the cost-of-living crisis hit, the market faced further pressures.
In a bid to cope with rising inflation rates, the Bank of England increased interest rates 14 times between December 2021 and August 2023 which pushed mortgage rates up to a 15-year high.
Despite this, the Bank have recently stopped rising interest rates for the time being, which, filled homeowners with hope that their mortgage payments wouldn’t continue to skyrocket. However, investors have claimed that they do not expect any rate cuts until the second half of next year.
Imogen Pattison, an economist at consultancy Capital Economics, said the signs of weaker demand for homes and of an increase in properties coming onto the market meant prices were probably only halfway through a 10% fall from last year’s peak.
She said: ‘While some buyers are able to accept higher mortgage payments, helping to prop up house prices, their number is dwindling as shown by the drop in mortgage approvals in September.’
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