House prices rose by 0.7% in October according to Nationwide, putting annual growth at 9.9%. While growth is gradually slowing, the supply/demand imbalance is expected to keep growth positive.

Transaction activity spiked for a third time in September as the stamp duty holiday came to a close. House sales were 63% above the 2017-19 average for the month, but we will undoubtedly see a dip in activity in the October data. Thereafter, transactions are likely to remain strong, as the number of sales agreed in October were still 17% above the 2017-19 average for the month. 

First Time Buyers (FTBs) have regained a competitive advantage with the end of the stamp duty holiday, being either exempt or paying reduced tax on homes under £500k. FTBs had fallen in market share over 2020/21, not seeing the same level of boost from the stamp duty holiday as other buyers types. There is evidence of this trend unwinding, with FTBs surging to the largest buyer type in the wake of the July stamp duty deadline. Rises in mortgage rates may limit their recovery however. 

A rise in the base rate in the near future is anticipated, with some lenders already pricing this in. While the Bank of England held the base rate at their recent meeting on the 4th of November, they having been increasingly hawkish in their desire to contain inflation. Rises in the base rate will translate into higher mortgage costs, but we expect the immediate effect on the housing market to be limited. Any rate rise is likely to be small, and most mortgages are on fixed rates and vetted on a 3% stress test designed to cope with such a rise in rates.

The Budget last month brought little new to the housing market, largely confirming existing policies. Tax rises and increases in the living costs may stretch affordability for some households however.

The average UK rent increased 1.3% over the year to September, according to the ONS. Rents grew most strongly in the East Midlands and the South West, up 2.7% each, and least in London, falling -0.3%.

Annual house price growth in July was strongest in Scottish Borders at 17.3% followed by Derbyshire Dales at 15.3%. Just over one in five local authorities saw double digit house price growth in the year to July. Weakest house price growth was in Westminster at -3.4%, followed by Aberdeen, at -2.9%.