House prices in the UK have seen a slight increase in October after six consecutive months of decline, according to a report by mortgage lender Halifax. The rise in prices is attributed to a lack of homes being put up for sale, rather than an increase in buyer demand.
On a seasonally adjusted basis, house prices in October were 1.1% higher than the previous month, marking the first increase since March. This follows a 0.3% drop in September. However, compared to the same period last year, house prices in October were still 3.2% lower, a slight improvement from September’s annual decline of 4.5%. The average house price now stands at £281,974, nearly £10,000 less than a year ago.
Kim Kinnaird, director of Halifax Mortgages, explains that the cautious attitude of prospective sellers is contributing to the low supply of homes for sale, which in turn is strengthening prices in the short-term. She emphasizes that the current price growth is not driven by buyer demand, which remains weak overall.
The Bank of England’s decision to maintain interest rates at 5.25%, a 15-year high, further adds to the challenges faced by buyers. The central bank stated that it is too soon to consider cutting interest rates, as consumer price inflation remains well above its 2% target.
Looking ahead, Halifax expects further declines in house prices before a return to growth in 2025. Kinnaird acknowledges that while some individuals may have experienced income growth through wage rises, the combination of higher interest rates and wider affordability pressures continue to pose challenges for potential buyers.
Overall, the current state of the UK housing market reflects a delicate balance between low supply and weak demand. The recent increase in house prices may provide some relief for homeowners, but the long-term outlook remains uncertain.
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