Annual house price growth slows, but prices edge up in October

House prices ticked up in October, according to Halifax, supported by the limited supply of properties available for sale, low mortgage rates and a strong jobs market.

Although house prices are growing at their slowest rate for five years, the bank said prices rose by 0.7% in October, following two consecutive monthly falls.

The average price of a house in the UK is now £227,869, with prices in the three months to October 1.5% higher than in the same three months last year. Halifax forecasts that annual growth will be between 0-3% in 2018.

Nationwide’s house price index showed that prices remained flat in October, with annual price growth slowing to 1.6%, down from 2% in September. The building society said that the average price of a property in the UK is now £214,534. It expects house prices to rise by around 1% over the course of the year.

First-time buyers leading the charge

Competitive mortgage rates and the Help to Buy scheme are helping more people get onto the property ladder, with Nationwide’s research showing that that there has been a recovery in first-time buyer transactions in recent years. The building society said they were now “broadly in line” with pre-crisis levels.

“The improvement in credit availability (including the introduction of schemes such as Help To Buy), historically low interest rates (in particular fixed rate deals), together with a steady improvement in labour market conditions in recent years have all helped boost activity,” said Robert Gardner, Nationwide’s chief economist.

In contrast, the number of people moving home remains “relatively subdued”, and there has been a reduction in the number of people purchasing buy-to-let properties with a mortgage following the introduction of tax changes and stricter lender criteria.

Longer term, house price movements will depend on how economic conditions evolve in the run up to and following Brexit. According to the EY Item Club, prices could rise by around 2.5% next year if the UK and EU are able to agree a Brexit deal.