House prices grew by 0.9% in October, putting the annual change at -3.3% nationally, according to Nationwide. While this uptick will be welcome news to some, monthly data can be volatile, and we expect the general downward trend in values to continue to trickle into next year. Our updated market forecasts will be published on the 8th November, with greater depth on our outlook on values and activity.

The stronger than expected value growth was accompanied by a surprisingly robust, albeit still low, number of completions. 92,600 transactions completed in September, according to HMRC. While there was a slight fall in the absolute number, it was an increase relative to pre-Covid averages for the month, at just -8.9% below the 2017-19 average. This was the strongest result since March this year. 

Completions will likely remain weaker, however, due to a fall in new mortgage approvals. Just 43,000 new mortgages were approved in September, which was -34% below the pre-Covid average for the month. This implies the number of completions will also fall in due course.

Both supply and stock remain muted, as a majority of surveyors continued to report both falling supply and demand, according to the September RICS survey. Demand was still falling faster than supply which will limit transaction numbers and suppress values.

The unchanged base rate supports a more stable economic backdrop. Inflation fell to 6.1% in September, down from 6.2% in August, according to the ONS, and in line with economists’ expectations. In response to this and wider economic indicators, the Bank of England held the base rate at 5.25% on 2nd November. Oxford Economics suggests we are now at the base rate peak, with the first cut still forecast for Q3 2024. 

Mortgage rates saw little change in October, suggesting lenders are reaching their limit of how much they can squeeze their margins before they need the base rate to fall to bring them down further. The comparatively high rates are likely to remain at current levels for some time, limiting buyer activity and restricting their purchasing power. This will continue to restrict the capacity for price growth.

Local variation in price falls has become increasingly apparent in the more lagged Land Registry data. Annual falls have been most apparent in Wales and the South East including Brent (-5.7%) and the Isle of Anglesey (-5.5%). In contrast, Nottingham saw growth of 9.4%.

Annual rental growth across the UK stayed high at 10.1% in September, only 0.1% lower than August, according to Zoopla. Rental growth accelerated across all regions except the South East and West Midlands on a three-month basis, as competition for limited stock continues to bolster growth.