Nationwide HPI: "House prices aren’t rising, they’re treading water while buyers wait on Rachel Reeves' Budget"

HOUSE prices are “treading water while buyers wait on Rachel Reeves' Budget”, property experts have said.

The annual rate of house price growth was 2.2% in September, similar to the 2.1% seen in August, according to the Nationwide.

Northern Ireland remained the top performing area with annual house price growth of 9.6%, while the Outer South East was the weakest performing region, with 0.3% year-on-year rise.

Prices increased by 0.5% month on month, after taking account of seasonal effects.

Robert Gardner, Nationwide's Chief Economist, said: “The broad stability in the annual rate of house price growth over the past three months mirrors that of activity. The number of mortgages approved for house purchase have been hovering at around 65,000 cases per month, close to the pre-pandemic average (despite the higher interest rate environment).

“Despite ongoing uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.

“Unemployment is low, earnings are rising at a healthy pace, household balance sheets are strong and borrowing costs are likely to moderate a little further if Bank Rate is lowered in the coming quarters as we, and most other analysts, expect.

“Providing the broader economic recovery is maintained, housing market activity is likely to strengthen gradually in the quarters ahead."

Financial experts shared their views on the figures which they say shows the housing market is “stuck in neutral”.

Omer Mehmet, Managing Director at Welling-based Trinity Finance, said people are waiting for the Budget in November.

He added: "House prices aren’t rising, they’re treading water while buyers wait on Rachel Reeves' Budget. A 2.2% annual uptick is less a sign of strength and more a reflection of a market in limbo. 

"Northern Ireland may be surging, but much of the South East is barely moving. Until Westminster stops playing guessing games on property taxes and the Bank of England gives real clarity on rates, the housing market will stay stuck in neutral."

Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, agreed, adding: "There may not be much change in the annual rate of house price growth but there is potentially lots of change coming in the form of the Autumn Budget and that is already starting to see many would-be buyers sit tight. 

"The one positive amid ongoing economic and polititical uncertainty is that it is very much a buyers' market and people are increasingly alive to that fact. That is keeping the market moving even as the Budget uncertainty grips the nation."

Andrew Montlake, CEO at London-based Coreco, said people are missing out in a “buyers market” now.

He added: “September saw prices bounce back a little, with the annual rate of price growth also edging up slightly. The property market isn't in tip top shape but neither is it flat on its face. 

"The Budget is not helping activity levels as many people are sitting on their hands and waiting to see what will happen and how any announcements could impact their finances. 

"The danger for anyone waiting is that they are at risk of missing out on a buyers' market now. Though the country is in a difficult place economically, lenders have targets to hit and are keen to get the property market moving.”

Chris Barry, Director at London-based Thomas Legal, said the reality was worse than the data.

He continued: "Nationwide’s data suggests house prices are still growing. In reality, we are seeing a large number of price reduction both in properties which have been on the market for just a few weeks, and properties which have already secured a buyer.

“Future data is likely to publish a decline in property prices which will help attract more buyers to even out the gap between supply and demand.”

Ranald Mitchell, Director at Norwich-based Charwin Mortgages, agreed that buyers are “hestitating”.

He said: "The modest uptick in house prices we’re seeing now may just be the tail end of the old market. Buyers and movers are hesitating, waiting to see what Rachel Reeves lays out in the November Budget. 

"If property taxation is reshaped in a big way, as many expect, it could trigger the single biggest disruption to pricing and demand in a generation. Right now, there’s an undercurrent of apprehension across the market, with many sitting on their hands until the Chancellor shows her hand."

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, pointed out that Northern Ireland figures showed strong growth compared to the rest of the UK.

He said: "Again, Northern Ireland continues to outstrip growth in other areas of the country with a reported surge of 9.6%. With house prices in other regions looking patchy, there are clear winners and losers geographically. 

"For many buyers and movers there is a pregnant pause in the purchasing cycle as we wait to see what the Budget unleashes which could be disrupting these statistics."