Yearly house price growth increased to 5.8% in the year to October 2020, Nationwide’s House Price Index has found.
This represents an increase from the 5.0% growth in September 2020.
Monthly price growth has slowed from 0.9% between August and September to 0.8% between September and October.
Robert Gardner, Nationwide’s chief economist, said: “Data suggests that the economic recovery has lost momentum in recent months with economic growth slowing sharply to 2.1% in August, down from 6.4% in July, despite a strong boost to the hospitality sector from the Eat Out to Help Out scheme, which has since expired.
“Labour market conditions also weakened with the unemployment rate rising to 4.5% in the three months to August – still low by historic standards, but up from an average of 3.8% in 2019.
“Nevertheless, housing market activity has remained robust. Mortgage approvals for house purchase climbed to 91,500 in September – the highest level since 2007.”
He added: “The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.
“Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.
“However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”
The typical house price now stands at £227,826.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The dynamic of the housing market has changed over the past few weeks since pandemic restrictions have tightened. On the ground, we’re seeing fewer viewings, offers and longer transition times as lenders and conveyancers struggle with the backlog.
“However, we haven’t yet experienced widespread price re-negotiation or withdrawals from previously-agreed deals. That feverish buying and selling of late summer has been replaced by activity at a pace we might have otherwise expected at this time of year.
“These strong Nationwide figures clearly demonstrate yet again that we are not just a nation of shopkeepers but shoppers. Even the prospect of losing what is for many a relatively-limited reduction in stamp duty – and of course continuing low interest rates – seems sufficient for now to outweigh concerns about another lockdown and worsening economic outlook, just as we saw with the significant impact on the restaurant trade recently of the ‘eat out to help out’ scheme.
“Looking forward, we don’t expect huge change until it is almost impossible to take advantage of the concession, unless of course the scheme is extended or replaced with further help for first-time buyers, such as the promised government-backed higher loan-to-value mortgages.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With mortgage approvals rising to 91,500 in September, the highest level since 2007, it is no surprise that property prices continue to rise on the back of higher demand. However, while prices are still rising, there are some concerns for the outlook with evidence that the economic recovery and labour market conditions are looking less rosy.
“The stamp duty holiday has clearly stimulated the market, combined with the impact of Covid and the desire for people to move somewhere with more outside space. The end of the stamp duty deadline is a concern, and needs looking at by the government, although it is focusing buyers’ minds on getting deals done in the short term.
“The problem borrowers face is lenders’ service levels, with some struggling with the rise in demand. Price and criteria are key when choosing a mortgage, but borrowers must also consider how long a lender is going to take.
“Nationwide reports that many homeowners are staying put and improving rather than moving. Refinancing to raise money to pay for refurbishments is proving popular as the lockdown experience makes many of us think differently about our homes.”