UK house price growth slowed in October, with annual prices rising by just 0.5%, according to the Nationwide House Price Index.
Nationwide said house prices were flat month on month, with the average house price at £273,566, marking the weakest growth since January 2024.
Robert Gardner, chief economist at Nationwide, said the softening of prices is partly driven by economic uncertainty.
“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns.
“This in turn has led to mounting financial market expectations of Bank Rate increases, which have maintained upward pressure on the market interest rates which underpin mortgage pricing.”
Gardner said further softness looks likely in the near term, with new buyer enquiries remaining weak. In addition, consumer sentiment dipped noticeably in October, with households becoming less confident about the outlook for the general economy as well as their own financial situation in the year ahead.
However, he noted that once the energy shock fades, there are “good reasons” to believe the market will regain momentum.
“The broader economy has proven surprisingly resilient to date, with annual economic growth accelerating in recent quarters. Employment is holding up well, as are real incomes, while household balance sheets are solid, with debt levels still close to 20-year lows relative to household disposable income.
“Moreover, the improvement in housing affordability seen over the past two years has been only partially unwound as a result of higher market interest rates, as income growth has continued to outpace house price growth by a wide margin,” Gardner added.
Commenting on the figures, Karen Noye, mortgage expert at Quilter, said: “The Budget had loomed large over the housing market in recent months and buyers and sellers now have greater clarity over the direction of government policy. However, that clarity comes with some significant changes for the housing market.
“The further two percentage point increase in property income tax from April 2027 will add to the pressures already facing landlords. That could further dampen appetite among buy-to-let investors and, over time, risks reducing the supply of rental properties. At the other end of the market, the new Our First Home scheme should provide a welcome helping hand to aspiring homeowners.
“However, government support can only do so much. Mortgage affordability remains the biggest piece of the puzzle. Buyers are still highly sensitive to monthly costs and, until borrowing becomes meaningfully cheaper, the housing market is likely to remain relatively subdued.”
