House prices returned to growth in October, according to a closely watched measure that cited “constrained supply” of stock in the market.
Nationwide Building Society’s monthly index showed a 0.9% rise last month when compared to September’s flat performance, taking the annual rate to -3.3% from -5.3%.
Values have been hurt this year due to the impact of the continuing cost of living crisis and surge in borrowing costs imposed by the Bank of England to tackle inflation.
Robert Gardner, Nationwide’s chief economist, said housing market activity “remained extremely weak” as a result of the squeeze.
He cited figures from the Bank published on Tuesday that showed just 43,300 mortgages were approved in September, a figure that is around a third down on the pre-pandemic monthly average.
“This is not surprising”, he wrote, “as affordability remains stretched”.
“Market interest rates, which underpin mortgage pricing, have moderated somewhat but they are still well above the lows prevailing in 2021,” he said.
“The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained.
“There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels.
“Activity and house prices are likely to remain subdued in the coming quarters”, he concluded.
He made the prediction amid no sign of any major easing in mortgage costs for the foreseeable future.
The Bank of England is not expected by financial markets to begin interest rate cuts until…
