Across the UK, year-on-year house price growth stood at 2.5%, up from 2.3% in September, the Nationwide Building Society has reported.
Property values edged up by 0.2% month-on-month in October, taking the average house price in the UK to £211,085.
Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth remains within the 2-4% range that has prevailing since March.
“Low mortgage rates and healthy rates of employment growth are providing some support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. He added: “The lack of homes on the market is providing support to house prices.”
Interest rate rises
Referring to speculation that the Bank of England base rate could possibly be about to rise back up to 0.5%, from its current low of 0.25%, Gardner commented: “The impact of a small rate rise on most UK households is likely to be modest.
“The proportion of borrowers directly impacted by a rate rise will be smaller than in the past, in part because the vast majority of new mortgages in recent years were extended on fixed interest rates.”
He said the share of outstanding mortgages on variable rates, which are likely to see an increase in payments if the bank rate is increased, has fallen to around 40%, down from a peak of around 70% in 2001.
Gardner continued: “Moreover, a 0.25% increase in rates is likely to have a modest impact on most borrowers who are on variable rates. For example, on the average mortgage, an increase of 0.25% would increase monthly payments by £15 to £665.” This wouldwork out as a £180 per year increase.
Howard Archer, chief economic adviser at EY ITEM Club, said: “Housing market activity has picked up overall from the lows seen around mid-2017 but is still hardly buoyant.”
He added: “We see house prices being muted over the fourth quarter and then rising a modest 2-3% in 2018.”