House prices rose by 1.1 per cent in October ending a run of six consecutive monthly falls, Halifax data shows.
The typical home now costs £281,974, up around £3,000 compared to September, but 3.2 per cent – or £9,274 – down compared to this time last year.
This chimes with what the mortgage lender Nationwide reported last week. It said house prices rose 0.9 per cent in October, but remain 3.3 per cent down annually.
However, Halifax and other property market experts warned that there could be more falls to come and that sellers shouldn’t get ‘carried away’ by the modest increase.
Uptick: The typical UK home now costs £281,974, up around £3,000 on the previous month but more than £9,000 compared to the same time last year
Halifax attributed the monthly price rise to the fact that fewer homes are coming to market, driving up competition for those that do.
It noted a weakness in buyer demand as a result of higher mortgage rates.
Kim Kinnaird, director at Halifax Mortgages, said ‘Prospective sellers appear to be taking a cautious attitude, 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.’
Despite the rise this month, Halifax still expects house prices to fall in the longer term. This echoes similar statements put out recently by both Lloyds Bank and real estate group, JLL.
Last week, JLL said property prices across Britain will have fallen 6 per cent by the end of 2023 and 3 per cent the year after.
Overall, the housing market remains subdued, according to Halifax with October marking the first rise in the cost of a typical UK home since March
Kinnaird added: ‘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.
‘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.
‘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.’
Halifax data ‘only tells part of the story’
While Halifax, like Nationwide, is one of the biggest mortgage lenders, the data doesn’t give a whole of market view of what’s happening.
This is because it is based on the lender’s approved mortgage applications. This means it excludes mortgage applications with all other lenders.
It also doesn’t include cash buyer transactions, which this year are making up around a third of all sales, according to Zoopla. Normally cash buyers only account for one in five sales.
Mortgaged purchases are also down by more than a third annually meaning that Halifax will likely have less data to go on than in previous years.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, says: ‘Halifax may be the country’s largest lender with historically reliable mortgage approval trends in its market survey but lack of inclusion of cash buyers, who make up about 30 per cent of the total, as well as borrowers from other lenders, means it tells only part of the story.
‘On the ground, we are seeing more business than the Halifax suggests with those not dependent on finance in particular negotiating hard with serious sellers as successive interest rate rises have taken their toll on borrowers.
‘However, we are not getting carried away with the modest rise in prices shown here.
‘Transactions remain subdued so looking forward we don’t expect to see much improvement in the market until January or February of next year as the earliest.’
Anthony Codling, housing market analyst at RBC Capital Markets, added: These rises appear to be driven by falling supply rather than rising demand, but those selling are unlikely to be worried about which lever is leading to price rises.
‘In our view the housing market is reaching a new equilibrium where mortgage rates will be higher for longer, housing transactions will be lower for longer and house prices will be much firmer for longer.’
Prices fall 6% in South East England
While all the UK nations and regions saw house prices decline on an annual basis, some have fallen much more than others.
In South East prices have fallen 6 per cent over the last year, with typical prices going from around £398,000 to £374,000, according to Halifax.
Scotland’s house prices have proved the most resilient, down just 0.2 per cent year-on-year. It’s a similar picture in Northern Ireland, with a decline of 0.5 per cent.
Meanwhile property prices in Wales have fallen by 3.9 per cent over the year and London has fallen 4.6 per cent.
Regional differences: In South East England prices have fallen by 6 per cent over the last year, with typical prices going from around £398,000 to £374,000, according to Halifax
