Annual house price growth in Britain slows to 0.5% — The Guardian

In the United Kingdom, annual house price growth slowed to 0.5% in October, marking the lowest rate in more than two years. The average property price stood at £273,566 and was unchanged from the previous month.

More expensive mortgages restrain the market

As reported by The Guardian, annual price growth stood at 0.8% in September. The data were published by lender Nationwide. The slowdown comes amid higher borrowing costs for homebuyers.

In October, the average rate on a five-year fixed-rate mortgage reached 6% for the first time in three years. According to Moneyfacts, it stood at 5.99% on Thursday, while the average rate on a two-year fixed-rate mortgage was 5.97%.

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The Bank of England has not changed its base rate since December, keeping it at 3.75%. At the same time, fluctuations in the bond market have pushed up swap rates, which affect the pricing of fixed-rate mortgage loans.

Price expectations

Nationwide chief economist Robert Gardner said that the war in the Middle East had heightened concerns about inflation and expectations of higher interest rates. According to him, inquiries from new buyers remain weak, while consumer sentiment deteriorated noticeably in October.

Tom Bill, head of UK residential research at Knight Frank, believes that rising mortgage costs outweigh the impact of support measures announced in the budget. Chancellor John Healey this week confirmed the £4.7 billion Your First Home programme to help first-time buyers. Pantheon Macroeconomics economist Rob Wood suggested that the programme could provide some support to the market, but prices next year are likely to remain subdued.