01 November 2023
If you are covering the Nationwide house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“This morning’s house price index from Nationwide suggests that despite the ongoing economic pressure and high interest rates, the property market is faring a little better than expected, with a 0.9% uptick in house prices reported in October.
“Despite this unexpected increase, however, the future of the UK housing market remains uncertain. Though inflation has continued to lower, house prices are nowhere near keeping up with the level of inflation elsewhere in the economy – particularly as Nationwide reported house prices are down 3.3% year on year. The Bank of England is also widely expected to keep interest rates higher for longer, which will pile continuous pressure on those with mortgages and will make taking the first step onto the property ladder unaffordable for many.
“Just yesterday, new figures showed the UK property market remains in a deep freeze, as UK residential transactions fell by 17% in September compared to the year prior. What would typically be a busy summer has been remarkably quiet as buyers have been in ‘wait and see’ mode. Given the property market tends to slow in the winter months anyway, we could see house prices buckle under the pressure and this 0.9% uptick may prove to be a one off.
“Tomorrow’s BoE interest rate decision will reveal whether prospective buyers can hope for a more stable interest rate environment, and will also play a role in how house prices fare in the coming months. If the Bank opts to hold rates, predictability will improve which can be invaluable for prospective buyers. However, if the Bank opts to hike rates further then it will prolong the dearth of demand in the market which could see house prices dip.”
