Nationwide: UK property values climb upwards despite Autumn Budget uncertainty

The housing market appears to have had a stable September in the build-up to the Autumn Budget.

The latest Nationwide House Price Index showed average property values rose slightly by 0.5% on a monthly basis, reversing a 0.1% dip in August.

Annual house price growth also climbed slightly from 2.1% to 2.2%.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

This put average UK house prices at £271,995.

It comes amid uncertainty about property taxes, with chancellor Rachel Reeves rumoured to be considering replacing stamp duty with a national property tax on the sale of homes above £500,000 in her Autumn Budget.

There are also reports that sales of properties above £1.5 million could face capital gains tax charges.

Robert Gardner, chief economist for Nationwide, said: “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.”

Are house prices rising?

House price growth has been hit in recent months after Stamp Duty thresholds dropped in April, pushing up the cost of buying a property.

Demand has dropped, which has left more homes on the market.

But buyers are also being boosted by lower mortgage rates, which is encouraging many to get on with their move despite uncertainty about future property taxes.

The average house price figures mask what is going on across a variety of different markets across the UK.

Northern Ireland remained the strongest performer by a wide margin, with annual house price growth of 9.6% in the quarter, Nationwide said.

Wales saw a slight increase in annual house price growth to 3%, up from 2.6% in the second quarter, while growth in Scotland slowed from 4.5% to to 2.9%.

England saw a further slowing in annual house price growth to 1.6%, from 2.5% in the second quarter.

Average prices in the norther of England were up 3.4% year on year but slowed to 0.7% in the south.

Price growth is also linked to the type of property.

Nationwide’s data shows semi-detached properties have seen the biggest percentage rise in prices over the past 12 months, with average prices up 3.4% year on year.

Detached and terraced properties saw similar growth, at 2.5% and 2.4% respectively. However, flats saw a small year-on-year decline of 0.3%.

It comes as Zoopla warned earlier this week that the top-end of the property market has stalled due to uncertainty about the Autumn Budget, while Bank of England data shows the number of mortgage approvals dropped in August. This could indicate a slower market ahead, at least until the outcome of the Budget in November.

Commenting on the data, Tom Bill, head of UK residential research at Knight Frank, said: “High levels of supply and a growing sense of uncertainty as November’s Budget approaches are both keeping downwards pressure on demand and prices.

“Stable mortgage rates so far this year have encouraged buyers to act but a repeat of last year’s game of ‘guess the tax rise’ ahead of the Budget means hesitancy will rise over the next two months, which prompted us to recently downgrade our 2025 UK forecast to 1% from 3.5%. As it increasingly becomes a buyer’s market, sellers will need to be realistic with asking prices to get buyers through the door for a viewing.”