Annual house price growth slowed to 7.2% in October, from 9.5% in September leaving the wider outlook ‘extremely uncertain’ the Nationwide House Price Index reveals.

Robert Gardner, Nationwide’s Chief Economist, says: “October saw a sharp slowdown in annual house price growth, to 7.2% from 9.5% in September.

“Prices fell by 0.9% month-on-month, after taking account of seasonal effects, the first such fall since July 2021 and the largest since June 2020.

IMPACTED

“The market has undoubtedly been impacted by the turmoil following the mini-Budget, which led to a sharp rise in market interest rates.”

Gardner adds: “The market looks set to slow in the coming quarters. Inflation will remain high for some time yet and Bank Rate is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.

The outlook is extremely uncertain, and much will depend on how the broader economy performs.”

“The outlook is extremely uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible.”

Gardner says longer term borrowing costs have fallen back in recent weeks and may ease further if investor sentiment continues to recover.

REACTION

Nathan Emerson, Chief Executive of Propertymark, says: “Agents are reporting more homes for sale coming to the market, giving buyers more choice than they have had over the past two years. They no longer have a fear of losing out on a property and can therefore be more level-headed with the offers they’re putting forward, which will naturally see a softening in prices being achieved over the next few months.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, adds: “These figures are interesting as they already show a sharp fall even before the shock of the mini-budget hit the market.

“Activity has slowly started to resume since as mortgage rates began to stabilise and are now starting to fall. Buyers are negotiating hard as they strive to take advantage of good mortgage offers while prices continue to be supported by lack of stock.”

Mark Harris, Chief Executive of mortgage broker SPF Private Clients, says: “House prices continue to rise year-on-year but at a slower pace as higher mortgage costs, along with the rising cost of living, have an impact on affordability.

“Swap rates have calmed since the furore of the fallout of the mini Budget, with two-year money easing by more than 100 basis points over the past month.”

Tomer Aboody, Director of property lender MT Finance, says: “Given recent political uncertainty, combined with interest rate fluctuations, it is no surprise that there is a slowdown in the housing market, as buyers and sellers are unsure whether to proceed.

“Rising cost of living and higher interest rates translate into less money in people’s pockets and therefore a different approach, until these higher costs become the norm.”