UK house price growth eased in October as potential buyers held back ahead of the upcoming autumn budget, amid speculation that new property taxes could be introduced.
Figures from Nationwide show the average house price rose 0.3% last month to £272,226, slowing from 0.5% growth in September. On an annual basis, prices were up 2.4%, compared with 2.2% the previous month.
Despite the slower pace, the data suggest the housing market remains more resilient than expected, even as interest rates stay elevated and economic uncertainty persists.
Buyers pause amid tax concerns
Analysts say the slowdown reflects caution among buyers ahead of Chancellor Rachel Reeves’s first budget on 26 November, which could include changes to property taxation.
“Homebuyers are sitting on the sidelines waiting to see what next month’s budget will bring,” said Anthony Codling, a housing analyst at RBC Capital Markets. “If the housing market is one thing, it is resilient. Prices remain close to all-time highs, and the prospect of further rate cuts will underpin stability.”
According to reports, Treasury officials have considered introducing a new levy on homes valued above £500,000, although no final decision has been made.
Estate agents say the uncertainty has led to a cooling in activity at the top end of the market. “The market is sluggish, particularly at the higher end,” said Amy Reynolds, head of sales at Antony Roberts in west London.
Signs of resilience in housing market
The slowdown in price growth comes despite continued demand from first-time buyers and a gradual improvement in affordability following recent interest rate cuts.
The Bank of England lowered borrowing costs in August and is expected to deliver another reduction at its upcoming meeting, which could further ease pressure on mortgage holders.
Robert Gardner, Nationwide’s chief economist, said the market’s performance in recent months has shown “broad stability”, with house prices and mortgage approvals similar to levels seen before the pandemic.
“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience,” he said. “Mortgage rates are still more than double pre-Covid levels, and yet prices are holding close to record highs.”
Property platform Rightmove also reported continued activity in the market, noting “resilience” in the number of homes being listed, though it said the typical “autumn bounce” in asking prices had not materialised.
Nationwide expects housing affordability to improve gradually in the months ahead, provided that income growth continues to outpace property prices and borrowing costs decline further.
