House prices increased by 1.1% in October as supply of homes dipped, according to the latest Halifax House Price Index.
Prices were still 3.2% less than they were in October last year and this monthly uplift in prices comes following six consecutive falls. In September prices fell by 0.3% on Halifax’s index.
It means a typical UK home now costs £281,974 – an increase of £3,000 on the previous month.
Kim Kinnaird, director of Halifax Mortgages, thought this may just be a blip rather than a reversal of the trend and that prices would continue to fall going forward.
“Prospective sellers appear to be taking a cautious attitude,” she said, “leading to a low supply of homes for sale.
“This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall.
“While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers.”
Kinnaird said it was not expected there would be a decline in the Bank of England Base Rate any time soon and, as such, house prices would not fall further overall.
“Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s Base Rate soon, we expect house prices to fall further overall – with a return to growth from 2025,” she said.
“The current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
Big price falls in the South East
Although there was an uptick in October, over the year prices have fallen in all areas of the UK, according to Halifax’s data. The biggest drop in prices annually was seen in the South East of England where an average of 6% has been shaved off the price of a typical home.
Scotland was the most resilient region, prices here fell just 0.2% annually. In Northern Ireland there was a fall of 0.5%, and in Wales typical values tumbled by 3.9% over the year, said Halifax.
London has the highest average house price in the UK at £524,057, falling by 4.6% over the last year.
Charlotte Nixon, mortgage expert at Quilter, said despite the fall in average values recently, bricks and mortar remained strong and prices were still well above pre-pandemic values.
As such she expects prices would reset somewhat over the coming months.
“The Bank of England just last week opted to hold rates and the reality is we may all need to get used to rates at this level as we enter a ‘higher for longer’ phase,” she said.
“The result of this will not be a housing market in freefall but one that is recalibrating after a period of cheap debt-fuelled buoyancy.”
Nixon added: “For those considering their next move, the strategy is less about rushing in and more about measured decisions that suit your life needs in the here and now rather than trying to time the market.”
