LONDON (Reuters) -British house prices rose in October, lender Nationwide said on Friday outpacing forecasts by economists and adding to signs of demand in the housing market in the run-up to finance minister Rachel Reeves’ budget which is likely to include tax increases.
Nationwide said its house price index increased by a monthly 0.3% after rising by 0.5% in September.
House prices were 2.4% higher than a year earlier, speeding up from an annual increase of 2.2% in September, it said.
Economists polled by Reuters had on average forecast no change in prices in monthly terms and a 2.3% annual increase.
“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all time highs,” Robert Gardner, Nationwide’s Chief Economist, said.
Data published by the Bank of England on Wednesday showed the number of mortgages approved by lenders in September came in higher than expected.
However, some other measures of the housing market have suggested a slowing in price growth in recent months which has been attributed to caution among homebuyers ahead of Reeves’ budget on November 26.
Gardner said housing affordability was likely to improve modestly if income growth continues to outpace house price growth as Nationwide expects.
“Borrowing costs are also likely to moderate a little further if Bank Rate is lowered again in the coming quarters,” he said, referring to the BoE’s benchmark rate.
“This should support buyer demand, especially since household balance sheets are strong – indeed, in aggregate the ratio of household debt to disposable income is at its lowest for two decades,” Gardner said.
(Writing by William Schomberg; Editing by Kate Holton)
