Prices rose by 0.9% from September when they had increased by a marginal 0.1%, Nationwide said
British house prices unexpectedly increased by nearly 1% in October but the rise was due more to a lack of homes for sale than a turnaround in the market which has been hit by a rise in borrowing costs, mortgage lender Nationwide said.
Prices rose by 0.9% from September when they had increased by a marginal 0.1%, Nationwide added.
It was the biggest monthly rise since August 2022.
In YoY terms, prices in October were 3.3% lower, a less sharp drop than September’s 5.3% decline.
Economists polled by Reuters had expected prices to drop by a monthly 0.4% and by 4.8% YoY.
The rise in house prices in October most likely reflects the fact that the supply of properties on the market is constrained, Nationwide Chief Economist Robert Gardner said.
Last month, a monthly survey by the RICS showed its members expected further declines in sales volumes in the coming months but expectations for sales in 12 months’ time turned positive for the first time since May.
Britain’s housing market boomed during the pandemic on soaring demand for bigger homes, pushing prices up by around 25%, as per Nationwide’s measure.
But the market has been hit by the BoE’s 14 interest rate hikes between December 2021 and August 2023 which pushed mortgage rates to a 15-year high.
The BoE is expected to leave the Bank Rate on hold for a second meeting in a row on Thursday. But investors do not expect any rate cuts until H2 2024.
Gardner added there was little evidence of forced selling of homes, which would push down prices, in large part because unemployment remains low, helping households to meet their higher mortgage costs.