The Halifax house price index showed this was a 0.2% monthly uplift, representing the fourth consecutive month that average values increased.
Despite annual growth slowing from 4.6% in September, the typical property price is now higher than the peak of £293,507 seen in June 2022.
Future house price growth likely to be ‘modest’
Amanda Bryden, head of mortgages at Halifax, said the fact house prices had reached similar levels seen during the ‘race for space’ in 2022 was a surprise considering the current economic climate, “but perhaps more noteworthy is that they didn’t fall very far in the first place”.
Bryden added: “Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two-and-a-half years, recording a 0.2% increase overall. That’s a significant slowdown compared to the 21% rise we saw in the equivalent period from January 2020 to the summer of 2022.
“Despite the affordability challenge, market activity has been improving. The number of new mortgages agreed recently reached its highest level in two years. This aligns with average mortgage rates dropping steadily since spring – now over 160 basis points lower than in summer 2023 – coupled with continued positive income growth.”
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Bryden said: “Looking ahead, borrowing constraints remain a challenge for many buyers. Following the Budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer. New policies like higher stamp duty for second homebuyers and a return to previous thresholds for first-time buyers might also affect demand.
“While we expect house prices to keep growing, it will likely be at a modest pace for the rest of this year and into next.”
Housing market ‘building up steam’
Rachael Hunnisett, director at April Mortgages, said the housing market was “building up a head of steam as it enters its fourth consecutive month of growth”.
She said while the pace of growth had slowed compared with the previous month, “the recovery is truly well underway as it continues to eat up ground that it lost in 2022 and 2023”.
Hunnisett added: “How long this recovery lasts will largely depend on the confidence of buyers. Homeowners will be hoping that the Bank of England cuts rates again today to ease mortgage affordability further.
“However, the outlook for interest rates is more uncertain following last week’s Budget announcement, in which Rachel Reeves revealed plans to increase borrowing and spending.”
She said: “This fiscal stimulus is likely to make the bank more wary and this subsequently creates more uncertainty for borrowers.
“For mortgage customers who want to protect themselves against the threat of further rate volatility, they should consider fixing for a longer period.
“There are many competitive 10- and 15-year deals to choose from that remove the headache of switching for years to come.”
Verona Frankish, CEO of Yopa, said: “Although the market may have taken a brief pause for breath ahead of the Autumn Budget, we expect to see activity increase considerably between now and the end of March next year, as homebuyers look to make their move before stamp duty relief reverts back to previous thresholds.
“This means we’re in for a very strong end to 2024 and we can expect an accelerated rate of house price growth to materialise over the coming months as a result.”
Northern Ireland sees strongest growth in house prices
Average house prices in Northern Ireland jumped by 10.2% annually in October, giving the country the strongest growth across the UK. Here, the average house price came to £204,242.
Wales also saw a healthy rise at 5.6%, coming to an average of £225,543. Scotland reported a softer growth of 1.9% and an average house price of £206,480.
Within England, average house prices in the North West rose by the most at 5.9% annually to £235,587.
London remains the most expensive region, with prices averaging £543,308 following a 3.5% yearly uptick.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Average UK house prices jump to record high of £294k in October – Halifax
