The annual pace of house price growth continued to moderate in October, declining to 9% from 9.4% in September, the second consecutive month where annual growth has fallen. This is despite house prices increasing by 0.5% month on month in October.
- UK house prices rose by 0.5% in October
- Annual house price growth slowed to 9.0%
Commenting on the figures, Robert Gardner, Nationwides Chief Economist, said:
“The annual pace of house price growth continued to moderate in October, declining to 9% from 9.4% in September, the second consecutive month where annual growth has fallen. This is despite house prices increasing by 0.5% month on month in October.
“A variety of indicators suggest that the market has lost
momentum. The number of mortgages approved for house
purchase in September was almost 20% below the level
prevailing at the start of the year. Some forward looking
indicators, such as new buyer enquiries, suggest that activity
may soften further in the near term, especially in London”.
“However, broader economic indicators remain positive. The
labour market has continued to improve, with the unemployment rate falling to 6% in the three months to
August and mortgage rates have fallen back towards all-time
lows (see chart overleaf). Indicators of consumer confidence
have also remained close to recent highs.
“If the economy and the labour market remain in good
shape, activity is likely to pick up in the quarters ahead
providing mortgage rates do not rise sharply.
Fixed rate mortgages increasingly popular:
“An increasing number of borrowers have been opting for
fixed rate mortgage deals in recent times. Data from the
Council of Mortgage Lenders suggests that around 90% of
new mortgages were contracted on fixed rates in recent
months, up from 67% two years ago.
“Fixed rate deals are most popular amongst first time buyers
for whom certainty over monthly payments is likely to be
particularly important (95% of new mortgage lending to first
time buyers is currently on fixed rates).