Nationwide customers have been dealt a financial blow worth £685 on Friday (October 30), as new figures reveal a drop in the average unadjusted UK property price from September to October.
The building society announced that prices fell from an average of £274,251 in September to £273,566 in October – a difference of £685. Analysts attribute the decline to surging borrowing costs, with some mortgage rates hitting 6%, and the conflict in the Middle East pushing up energy prices.
Market slowdown and buyer caution
Higher borrowing costs have squeezed affordability, causing prospective buyers to pause their searches. Buyer enquiries remain weak, and mortgage approvals have dropped to their lowest levels since 2023.
Meanwhile, the lead-up to John Healey's budget on Wednesday (October 28) created widespread caution. Many transactions slowed down as buyers waited for further fiscal clarity.
Expert commentary on the housing market
Robert Gardner, Nationwide’s Chief Economist, said: "October saw a further slowing in UK annual house price growth to 0.5%, from 0.8% in September. That is the weakest growth since January 2024. Prices were flat month on month, after taking account of seasonal factors."
Gardner added: "Market activity and house price growth have slowed in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns."
"This in turn has led to mounting financial market expectations of Bank Rate increases, which have maintained upward pressure on the market interest rates which underpin mortgage pricing," he said.
Regional trends and buyer behaviour
As reported by Birmingham Live, Jonathan Hopper, CEO of Garrington Property Finders, said: "On a national basis, we're in soft landing territory. But parts of the runway remain very bumpy. After falling 0.3% in September, the value of an average home recorded zero growth on a monthly basis in October."
Hopper noted that the quarterly fall in value has eased to 0.2%, but the annual pace of growth has slowed again. He said: "Two sentiment-led factors combined to keep prices stuck firmly in a rut over the past month; uncertainty over the Budget and the high cost of borrowing."
"The Budget may be behind us, but the affordability pressures remain. Supply and demand are doing the rest. In much of southern England, buyers are spoilt for choice and sellers have to compete hard just to get viewings, let alone a sale," he added.
Hopper continued: "Buyers who can easily walk away to another suitable property have little reason to stretch themselves to meet a seller’s optimistic asking price. When deals are struck, the negotiation is increasingly about pricing tomorrow’s risks as well as today’s value."
He said: "The buyers who do proceed will want the price they pay to reflect the possibility that their new home could be worth less in the short term. A lower purchase price cannot eliminate that risk, but it can provide some protection against it."
Hopper added: "But even though it’s a buyers’ market, smart buyers are being disciplined. Just because a seller offers a discount off an ambitious asking price, that does not automatically make a home good value. Buyers are scrutinising the price they actually pay, rather than simply the size of the reduction on offer."
He concluded: "No-one now expects the Bank of England to ease the pressure on mortgage interest rates when its Monetary Policy Committee meets next week. As a result we expect this cautious, negotiation-led market to continue over the coming months."
Gardner added: "Market activity and house price growth have slowed in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns."
"This in turn has led to mounting financial market expectations of Bank Rate increases, which have maintained upward pressure on the market interest rates which underpin mortgage pricing," he said.
