House prices in the UK fell 0.2 per cent in September compared with the previous month, according to mortgage provider Nationwide. On an annual basis, growth in house prices fell to its lowest rate of the year, up 0.8 per cent in September compared with a rise of 1.6 per cent in August. Robert Gardner, Nationwide’s chief economist, said activity in the property market “has remained subdued” in recent months, reflecting the uncertain economic backdrop, higher mortgage rates and expectations for interest rate rises.
Financial markets are pricing a high probability that the Bank of England will increase interest rates from 3.75 per cent by a quarter point at its November meeting. September’s figures, which were below economists’ forecasts, meant that prices have fallen in four of the past five months. Tom Bill, head of UK residential research at Knight Frank, said: “House prices are stalling as the impact of rising mortgage rates takes its toll on demand, a pattern we expect to continue in the final three months of this year.” Underlining the weakness of the property market, data published by the Bank of England on Tuesday showed that mortgage approvals fell to their lowest level since 2023 in August.
The central bank’s data also showed that the “effective” interest rate — the actual interest paid — on newly drawn mortgages rose to 4.60 per cent in August, up from 4.45 per cent in July and the highest in nearly two years. Uncertainty over the upcoming Budget on October 28 has also hit demand, property experts said. “Many buyers and sellers alike appear to be sitting on their hands as they wait for a clearer economic backdrop and a better understanding of the policy landscape ahead of chancellor John Healey’s first Budget,” said Karen Noye, mortgage expert at Quilter. Last week, the government announced a new support scheme for first-time buyers that is expected to boost parts of the housing market, particularly in more affordable parts of the country. “The housing market has been in desperate need of liquidity, and it’s good to see the government take action to provide it,” said Simon Gerrard, chair at Martyn Gerrard Estate Agents.
However, he noted that “first-time buyers are only one piece of the puzzle”. Nationwide’s regional analysis for the third quarter showed that price growth was weakest in London, the South East, East Anglia and the South West. Northern England, Scotland and Northern Ireland were the strongest-performing regions.
Source: Financial Times Companies · Summarized by HeadlinesBriefing