UK house prices return to growth amid ‘broad stability’ in market

The UK property market returned to growth in September after a summer lull, with house prices rising 0.5% compared with the previous month.

The average amount paid for a home ticked up to £271,995, according to Nationwide Building Society, recovering from a 0.1% decline in August, while the annual rate of house price growth accelerated slightly from 2.1% to 2.2%.

Robert Gardner, the chief economist at the building society, said there was now “broad stability” in the housing market.

“The number of mortgages approved for house purchase have been hovering at about 65,000 cases per month, close to the pre-pandemic average,” he said.

“Despite ongoing uncertainties in the global economy, underlying conditions for potential homebuyers in the UK remain supportive.

“Unemployment is low, earnings are rising at a healthy pace, household balance sheets are strong and borrowing costs are likely to moderate a little further if Bank Rate is lowered in the coming quarters as we, and most other analysts, expect.”

The Bank of England voted to leave interest rates on hold at 4% last month. Rates have fallen five times since last summer but the Bank’s governor, Andrew Bailey, has urged caution given persistent inflation, which held steady at 3.8% in August.

Amy Reynolds of the estate agency Antony Roberts said next month’s budget was also affecting buyer confidence.

“With the summer market now out of the way, which was surprisingly resilient given continued caution demonstrated by buyers, many are now waiting for what the budget might bring,” she said.

Rachel Reeves will reveal her second budget on 26 November, as speculation over tax increases continues. Over the summer the Treasury considered a new tax on the sale of homes worth more than £500,000, as part of a possible plan to overhaul stamp duty and council tax.

Separately on Wednesday, the FTSE 250 housebuilder Taylor Wimpey told its investors that its net private sales rate had slowed to 0.65 per outlet per week in the nine weeks ending on 28 September, down from 0.7 in the same period last year, adding that the “impact of the delayed UK budget” had affected “short-term customer confidence”.