UK Home Prices Show Unexpected Strength in October: Nationwide

The high-rise condominium under construction can be seen in the distance behind a row of houses in southern London, England, on August 6, 2021. (HenryNicholls / Reuters)

London — UK home prices last month rose faster than expected as strong demand and a shortage of new homes on the market maintained momentum, a study said Wednesday.

Mortgage lenders across the country said home prices rose 0.2% in September and then rose 0.7% on a monthly basis in October. Opinion polls by Reuters economists pointed to an additional 0.2% increase.

House prices rose 9.9% year-on-year due to higher house prices, the lowest annual growth rate since April.

Overall, the study highlighted the strength of the UK housing market during the COVID-19 pandemic. Even the gradual withdrawal of tax incentives for real estate purchases over the past few months has not significantly weakened the momentum.

Andrew Wishart, Real Estate Economist at Capital Economics, said:

The Bank of England interest rate decision results on Thursday will be one determinant of home prices in the coming months.

Financial market pricing suggests that BoE rate setters are likely to raise borrowing costs. However, economists are uncertain and many believe the BoE will wait until February.

“The outlook remains very uncertain,” said Robert Gardner, chief economist across the country.

“If the labor market remains resilient, the situation could remain fairly strong over the next few months, especially as the market remains strong and there is room for continuous change in housing preferences. I have.”