UK House Prices Rise More Than Expected In October

UK house prices increased at a faster-than-expected pace in October despite the expiry of the stamp duty holiday in September, data from the Nationwide Building Society showed on Wednesday.

House prices grew 9.9 percent year-on-year in October, following a 10 percent rise in September. Economists had forecast the growth rate to ease to 9.3 percent.

On a monthly basis, house prices advanced 0.7 percent after rising 0.2 percent in September. Prices were expected to climb 0.4 percent.

The price of a typical UK home has passed the GBP 250,000 mark, an increase of GBP 30,728 since the pandemic struck in March 2020.

The outlook remains extremely uncertain, Robert Gardner, Nationwide’s chief economist, said.

“If the labor market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences as a result of the pandemic to continue to support activity,” Gardner added.

Further, Gardner said even if wider economic conditions continue to improve, rising interest rates may exert a cooling influence on the market, though the impact on existing borrowers is likely to be modest.

Yet another upside surprise in house prices last month confirmed that the end of the stamp duty holiday in September did little to cool the market, Andrew Wishart, an economist at Capital Economics, said.

The economist expects house prices to continue to beat expectations in the near term before a gradual rise in mortgage rates applies the brakes in the second half of 2022.

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