British House Prices Update

LONDON (Reuters) – British house prices rose by a marginal 0.1% in October, slowing sharply from a 0.6% monthly increase in September. However, the market remained resilient and was likely to gain momentum as borrowing costs fall, according to mortgage lender Nationwide on Friday.

Economists polled by Reuters had forecast prices would rise by 0.3% on a monthly basis.

Compared to October last year, prices were 2.4% higher, which is a weaker annual increase than September's 3.2% rise and below the median forecast for a 2.8% gain in the Reuters poll.

Robert Gardner, Nationwide's chief economist, stated that the housing market remains resilient and activity is likely to strengthen as interest rates fall.

The Bank of England is expected to cut borrowing costs on Thursday next week, followed by further reductions in 2025.

The expiry at the end of March next year of a temporary tax incentive for home buyers, confirmed in finance minister Rachel Reeves’ first budget this week, is likely to increase demand in the first three months of 2025.

“However, the swings in activity are likely to be somewhat less pronounced, in this instance, given that the stamp duty reduction has been in place for some time and its planned expiry was well known,” said Gardner.

An increase in the higher rate of stamp duty for second homes could dampen demand for buy-to-let properties, he added.