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Property market ‘extremely weak’ with prices down on last year at an average of £259k | Personal Finance | Finance


House prices rose an average of 0.9 per cent month on month in October, according to Nationwide Building Society, although they were 3.3 per cent lower compared to the same month last year.

Across the UK, the average house price in October was £259,423.

Robert Gardner, Nationwide’s chief economist, said that despite the monthly increase in prices, activity in the housing market “remains very weak, with only 43,300 mortgages approved to buy a home in September, about 30 percent below the monthly average that prevailed in 2019. “.

Other analysts have described the “unexpected rise” as “a glimmer of hope” for homeowners that the worst of the downturn may be over.

Alice Haine, personal finance analyst at Best investment, said: “British house prices rose by 0.9 per cent on the month in October, giving homeowners hope that the worst of the downturn may be over. The unexpected rise led to an improvement in the annual rate of house price growth, which fell to -3.3 per cent from a -5.3 per cent decline in September.”

But while this may bring some relief, Ms Haine said: “The uptick reflects the low stock of properties available for sale as high borrowing costs and uncertain conditions have put many sellers off putting their home up for sale.”

Over the past month, the Bank of England Money and Credit Report showed a significant drop in mortgage approvals, falling from 45,400 in August to 43,300, which represents the lowest level since January.

Mr Haine said: “Mortgage approvals fell by almost five per cent in September, according to recent Bank of England data, and lending also fell as buyers avoided the market or wanted smaller homes and cheaper to help meet mortgage affordability criteria.

“Whether mortgage lending weakens further in the coming months depends on the BoE’s next move on interest rates.”

The Monetary Policy Committee, which is responsible for setting the base rate, is widely expected to keep it at 5.25 percent during its upcoming meeting on Thursday, amid easing inflation and growing concerns about wider economic downturn.

While another break could bring good news for first-time buyers, interest rates are now predicted to remain higher for longer to curb demand, which Ms Haine said could put downward pressure on property prices .

Meanwhile, Bob Singh, founder of Uxbridge-based Chess Mortgagesdescribed the property market as “malaise”, a term that reflects a general feeling of discomfort characterized by persistent stagnation.

He said: “Malaysia is the word I would use to describe the property market at the moment, but this data seems to suggest that there is momentum behind it. The rise is definitely in October prices have come out of the blue based on what we are seeing.

“Activity levels are down in all areas of the market, from first-time buyers and home movers to landlords. The buying market is on ice as first-time buyers are waiting for mortgage pricing and lower house prices even before jumping on the ladder. The market is likely to remain weak until we begin to see Base Rate cuts in mid-2024.”

Mr Singh said that while the Prime Rate is likely to remain steady in the short term, it is at least keeping up the pressure on lenders to offer better priced deals.

He added: “On a positive note, mortgage pricing is improving all the time. Lenders are cutting margins to attract new business and we’re seeing a lot of product innovation.”

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