UK house prices rose at their fastest pace since January, a leading property index shows, with demand improving despite ongoing market uncertainty over likely tax changes in this month’s budget.
Prices increased by 0.6% month-on-month in October, pushing the average cost of a UK home to a record high of £299,862, according to Halifax.
It marked a reversal from an unexpected 0.3% drop in prices recorded in September and was stronger than the 0.1% monthly increase forecast in a Reuters poll of economists. On an annual basis, house prices also rose 1.9%, with that figure also shooting past forecasts for a 1.5% rise.
“Demand from buyers has held up well coming into autumn, despite a degree of uncertainty in the market, with the number of new mortgages being approved recently hitting its highest level so far this year,” said Amanda Bryden, the head of mortgages at Halifax, which is part of the wider Lloyds Banking Group.
However, affordability continues to be a challenge, with many buyers opting for smaller deposits and longer terms to help make the numbers work.
Although average fixed rates on mortgages continue to hover around 4%, and are likely to ease further in the coming months, record-level property prices continue to make moving “feel like a stretch” for many prospective homebuyers, Bryden said.
“Rising costs for everyday essentials are also squeezing disposable incomes, which affects how much people are willing or able to spend on a new property,” she added. “Even so, while there has been some volatility, the market has proven resilient over recent months.”
October’s 0.6% rise suggests buyers have been willing to look past jitters over potential tax rises in Rachel Reeves’s budget on 26 November. The Guardian reported in August that the chancellor was considering replacing stamp duty with a new levy on the sale of homes worth more than £500,000.
