House prices edged up slightly in October, according to Nationwide’s latest House Price Index, rising 0.3% month-on-month to reach £272,226.
Annual house price growth rose to 2.4%, up from 2.2% in September, despite uncertainty ahead of November’s Budget and speculation about possible changes to property laws.
Property prices have remained stable over the past few months even though consumer confidence is low and the labour market cooling.
Robert Gardner, chief economist at Nationwide, said: “Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs.
“Looking forward, housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect. Borrowing costs are also likely to moderate a little further if Bank Rate is lowered again in the coming quarters.”
Renovations adding value to homes
With fewer people moving amid economic uncertainty, many are choosing to add value through home improvements.
Bathroom and kitchen renovations have proved most popular among homeowners over the past five years, analysis based on Nationwide’s House Price Index found, with nearly three-quarters (71%) carrying out one or both.
More than a third of homeowners (35%) made home improvements to their property to boost their property value, whilst over half (54%) said they’d made renovations to make their property look nicer.
Homeowners who build an extension or convert their loft can increase their property’s value by as much as a quarter, the building society said.
Mr Gardner said: “A 10% increase in floorspace, all things equal, adds 5% to the price of a typical house. But our analysis suggests that it is additional bedrooms that are key to adding value. For example, adding space to create an additional double bedroom can add 13% to the value of an existing two-bedroom house.
“Homeowners that add a loft conversion or extension, incorporating a large double bedroom and bathroom, can add as much as 24% to the value of a three-bedroom, one-bathroom house.”
