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UK house prices bounce back in October amid low supply

Halifax reports first monthly increase since March

According to the latest house price index from Halifax, UK house prices rose by 1.1% in October, following a 0.3% drop in September. This is the first monthly increase since March, when the average house price reached a record high of £287,000. The average house price in October was £281,974, an increase of around £3,000 over the month.

However, on an annual basis, property prices are still 3.2% lower than a year ago, compared with a 4.5% fall in the year to September. The greatest fall was seen in South East England, where prices decreased by 6% over the last year, followed by London, where prices dropped by 4.6%. In contrast, Scotland and Northern Ireland showed the most resilience, with prices falling by only 0.2% and 0.5% respectively.

Low supply of homes for sale supports prices

Halifax attributed the monthly rise in house prices to a low supply of homes for sale, rather than a strong buyer demand, which remains weak overall. Kim Kinnaird, director at Halifax Mortgages, explained:

Kinnaird also said that the outlook for the medium-term was not optimistic, as financial markets do not anticipate a decline in the Bank of England’s Base Rate soon. He added:

UK house prices bounce back in October amid low supply

Nationwide also reports surprise increase in house prices

Halifax’s report matches the findings from rival lender Nationwide, which also reported a surprise increase in house prices in October. According to Nationwide’s index, house prices rose by 0.9% month on month in October, the largest jump since March 2022. However, the average property value was still down 3.3% year on year, falling to £259,423.

Nationwide’s chief economist, Robert Gardner, said that the unexpected rise in house prices reflected a constrained supply of properties for buyers to choose from, as well as a modest improvement in consumer confidence and labour market conditions. He also noted that mortgage rates have fallen from their peaks last summer, as UK inflation has eased back.

However, Gardner warned that the outlook for the housing market remains uncertain, as the impact of the pandemic and the withdrawal of government support schemes are still unclear.

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