UK house prices rose in October, with the annual rate of price growth accelerating for a third consecutive month, the latest Halifax house price index showed.
According to the UK high street mortgage lender, the average price of a UK property in October was 0.3% higher than in September. And, compared with a year earlier, prices were up 4.5%. In September, the average annual house price rise was 4.0% and in August it was 2.6%.
“Increasing pressure on household finances and continuing affordability concerns are some of the factors likely to dampen buyer demand,” said Russell Galley, Managing Director, Halifax Community Bank. “That said we do not anticipate the Base Rate rise will be a barrier to buying a house.”
Lack of supply continues to underpin market
The main reason for the latest period of accelerating house price growth, was the continued lack of supply, the Halifax said. While there are some concerns over the still rising cost of living and a higher BOE base rate, demand for property remains relatively high.
Indeed, over 100,000 property sales have been achieved during each month this year so far. Something that is anticipated to continue.
Mortgage interest rates also remain low, at a time when employment is strong. That’s a combination continues to support an active house market and modest gains in house prices, Halifax said.
“The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, continues to support house prices and is likely to do so over the coming months,” Galley added.
Residential home building still on the rise
As the lack of property for sale in the UK is one of the key drivers of house price growth, it’s no surprise the recent construction purchasing managers index for October, reported a further increase in home building.
While commercial and civil engineering activity both slowed, the pace at which residential properties were built in October, was faster than during September, data firm IHS Markit said.
“Housing continued to show the strongest foundations and is set to be the main driver of growth in the coming months,” said Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply, who supports the monthly survey.