Key figures:
- Monthly Index: 327.9 (up from 325.8 in Sept)
- Monthly Change: 0.6% (from -0.4% in Sept)
- Annual Change: -0.9% (from -1.4% in Sept)
- Average Price (not seasonally adjusted): £164,153 (up from £163,964 in Sept)
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“UK house prices increased by 0.6% in October, more than offsetting the 0.4% decline recorded the previous month. Monthly price changes have failed to establish a strong trend in either direction over the past six months, with three months of increases and three months of price declines since May 2012.
“The annual pace of change continues to display a picture of relative stability, with house prices down just 0.9% compared to October 2011. This maintains the pattern that has been evident since late 2010, with annual price growth remaining in a narrow band between +1.5% and -1.5% on all but two occasions over the past two years. UK exits recession, but economic conditions still provide challenging backdrop for housing market “
After contracting for three quarters in a row, the UK emerged from recession in style, with the economy growing by 1% in the three months to September, almost twice as much as most analysts had expected. While this is clearly good news, it is important to recognise that a number of one-off factors such as the Olympics, provided a significant boost to activity in Q3.
“Indeed, UK economic output is still slightly below the level prevailing twelve months ago and more than three percentage points below its 2008 level. Therefore, while the data on economic growth suggests that the UK economy has not been performing quite as poorly as feared, there is little doubt that it remains extremely fragile.
“With households and the public sector focused on repairing their finances rather than spending, the economic recovery is likely to remain fairly sluggish, especially since headwinds look set to intensify in the quarters ahead. In particular, clouds are gathering over the global outlook. Eurozone business surveys point to a further slowdown in our key trading partners on the continent, while the US economy is also struggling to gain momentum. This threatens to hold back exports at a time when the UK is looking to international trade to drive its economy forward.
“This in turn suggests that the situation is likely to remain challenging in the housing market. Although the UK economy has been adding jobs in recent quarters, even in the midst of recession, conditions remain very difficult for households.
“Wage growth is still not keeping up with the cost of living (indeed, after taking account of inflation, regular pay is back at the levels prevailing in 2004) and unemployment is still well above normal levels. This helps to explain why housing market activity has remained subdued, with the number of mortgage approvals still running at little more than half their long-run average.
“Policy measures such as the Bank of England’s Funding for Lending Scheme, which is helping to keep down mortgage rates, should provide support for mortgage lending. Nevertheless, housing market conditions are likely to remain fairly subdued until there is a sustained improvement in the wider economic environment.”
Independent buying agent Gabby Adler says:
"An October price rise is encouraging following the disappointment of September when prices slipped. However, the Autumn market has been slower than expected with fewer new properties coming up for sale so transactions remain at low levels. Prices remain fairly flat and bumping along, as they have throughout the year.
"London continues to lead the rest of the country. In parts of the capital there is heightened competition, with a rise in the use of sealed bids for good properties. In such a scenario, the property will often achieve more than the asking price.
"Vendors are pricing more realistically on the whole and there are more price reductions than we've seen in recent months. Properties are either selling fast for a premium or sticking around."
Donna Houguez, market analyst at Quickmovenow.com, offered his view:
"Three months up, three months down says it all. The property market has zero direction and is being skewed by low transaction levels.
"The fact that prices are down over the year paints a far more accurate picture of the market and there is every chance they will continue to fall in 2013.
"Despite the fact that we have technically exited recession, the UK economy, as the Nationwide observes, remains under pressure and this will mean the property market has to fight for any gains.
"It is going to take the gap between real income and house prices to reduce in order for the recent economic growth we’ve seen to translate into an upturn in the housing market.
"High petrol, food and utility prices aren't helping. They're sapping people of confidence.
"There are two major factors holding back the property market - the big deposits required by first time buyers and the fact that many sellers are still being totally unrealistic with their asking prices."
Ashley Alexander, director, estate agent review website MeetMyAgent.co.uk, comments:
"It's hard to glean anything from the pattern of monthly movements because they are so up and down.
"The annual fall of 0.9% provides a better indicator of the state of the market. Although prices have fallen, the overall change is small, and 2012 will be viewed as a welcome stabilising of the housing market after a turbulent few years.
"The difficulty is predicting the next 12 months with any great confidence. I doubt agents will have ever gone into a new year with less certainty as to where property prices might go next.
"London prices continue to show staggering resilience, and it's reasonable to assume that the capital will continue to buck the trend as long as foreign investors don't lose faith. For the rest of the country, it could be a bleak winter with little evidence to suggest that the bottom of the market has been reached.
"That said, there have been signs recently that buyer activity is picking up. This needs to be sustained, as the expected seasonal uplift in buyers viewing properties over the past few months is larger due to lower-than-usual numbers of buyers viewing properties during the Olympics.
“There also seems to have been a shift in seller sentiment over the past month, with a larger number committed to selling their properties, accepting they need to be flexible to push the sale through rather than holding out for the best price.
"If you were going to write an end of year report on the UK housing market, you would probably give it a C+ accompanied by the words: "Showing signs of improvement but could do better."
