House prices climbed by 0.1% in October compared to 0.6% the preceding month, with budget uncertainty likely to have contributed to the slowdown.
Prices were up 2.4% on an annual basis, according to Nationwide’s latest House Price Index, down from 3.2% the previous month. The average price of UK property now stands at £265,738.
Robert Gardner, Nationwide’s chief economist, said: “Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment.
“Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.”
The building society said it was confident that growth would remain positive in coming months. “Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth,” said Mr Gardner.
A jump in the number of property transactions is expected in the run up to the expiry of the stamp duty extension at the end of March 2025, with the market then likely to quieten significantly. Nationwide analysis for the year to June 2024 suggests that the stamp duty change will impact around one in five first time buyers.
The largest effects are likely to be in the South East of England, where 40% of first-time buyers paid between £300,000 and £425,000 for their homes, where the change will increase cost of moving for the affected first-time buyers by £2,900 on average.
The areas least affected are Yorkshire & The Humber, the North of England and Northern Ireland, where less than 10% of first-time buyers paid between £325k and £425k for their homes.
The buy to let market is also likely to experience a slowdown following the introduction of the higher stamp duty surcharge for additional homes introduced in the Budget. This has increased by 2% to 5%, with the change kicking in from 31st October. Nationwide estimates that this will add around £4,000 to stamp duty costs, affecting around one in five residential transactions a year, equivalent to around 194,000 transactions.
