Much to the embarrassment of the housing market doom-mongers who predicted huge price drops this year, the UK property market is once again showing its resilience. The Nationwide House Price Index for October 2023 has revealed a respectable increase in property prices of 0.9%. However, this is still 3.3% lower than it was in October last year.
Although some property experts will hope their catastrophic predictions for the UK property market during the year will be forgotten, they shouldn’t. There are many ‘self-proclaimed’ experts on the internet who ply their trade in doom and gloom, some even making it onto television programs, and those same people have probably dissuaded some who needed to make the move they wanted not to.
Rather than apologies being forthcoming, the vast number who predicated a catastrophe will instead roll out a whole raft of excuses, ranging from “wait and see, it will still happen” to “the data is being manipulated and doesn’t tell the whole story”, and “you misunderstood what I was saying”. The simple fact is they were wrong.
That aside, let’s look at what the Nationwide House Price Index tells us.
UK house prices rose by 0.9% month on month in October. However, they are still 3.3% lower than they were in October last year. The average price for a property (not seasonally adjusted, stands at £259,423.
Robert Gardner, Nationwide’s Chief Economist, said about the figures,
“October saw a 0.9% rise in UK house prices, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth to -3.3%, from -5.3% in September.
“Nevertheless, housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.
“This is not surprising as affordability remains stretched. Market interest rates, which underpin mortgage pricing, have moderated somewhat, but they are still well above the lows prevailing in 2021.
“The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained. There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels.
“Activity and house prices are likely to remain subdued in the coming quarters. Despite signs that cost-of-living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries.
“With Bank Rate not expected to decline significantly in the years ahead, borrowing costs are unlikely to return to the historic lows seen in the aftermath of the pandemic.
“Instead, it appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim.”
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