The rate of annual house price growth has slowed to its weakest pace for nearly three years amid borrower caution because of rising mortgage costs, according to an index.
Nationwide Building Society said UK property values grew by 0.5% in October, down from 0.8% in September and the slowest growth since January 2024.
On a month-on-month basis, prices remained unchanged, with the average property across the UK standing at £273,566 in October.
Robert Gardner, Nationwide’s chief economist, said it comes as mortgage costs have increased because of expectations of upcoming interest rate rises as policymakers look to cool rising inflation caused by the Iran war.
He said: “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 the property market was expected to remain under pressure, but should recover once the energy price shock fades.
He said: “Forward-looking indicators suggest further softness in the near term.
“Surveyors report that new buyer inquiries remain weak.
“Moreover, consumer sentiment dipped noticeably in October, with households becoming less confident about the outlook for the general economy as well as their own financial situation in the year ahead.
“Once the energy shock fades, there are good reasons to believe the market will regain momentum.”
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