LONDON (Reuters) -British house prices rose by a slower-than-expected 1.3% in the 12 months to September, the weakest annual increase since April 2024, as economic and tax uncertainty overshadowed the market, figures from mortgage lender Halifax showed on Tuesday.
Prices unexpectedly fell in month-on-month terms, dropping by 0.3% from August.
Economists polled by Reuters had forecast prices would be 2.2% higher than a year earlier and rise 0.2% on the month.
In August prices rose by 2.0% compared with August 2024 and by a monthly 0.2%.
British house prices have increased more slowly this year than they did in the second half of 2024 when they were rising by between 4% and 5% annually due to worries about the economy and potentially more tax on properties with finance minister Rachel Reeves looking to shore up her budget in November.
“Although the broader economic outlook remains uncertain, with the affordability picture gradually improving we continue to expect modest growth through the remainder of the year,” Amanda Bryden, head of mortgages at Halifax, said.
Ashley Webb, an economist with Capital Economics, said the weak price data followed other indications that Britain’s slowing jobs market, still high borrowing costs and tax hike speculation were weighing on demand for housing.
“Tax rises in the budget would dent real household disposable incomes and weigh on the housing market next year,” Webb said.
House prices in London rose by 0.6% from 12 months earlier while the strongest growth was reported in Northern Ireland where prices rose by 6.5%, Halifax said.
Data from rival mortgage lender Nationwide published last week showed that prices rose by 0.5% in September alone, pushing annual house price inflation up to 2.2%.
(Writing by William Schomberg; Editing by Kate Holton and Sarah Young)
