UK house prices held up better than forecast in September as the recent surge in mortgage rates showed signs of easing.
Nationwide Building Society said average house prices were unchanged from August at £257,808 ($314,060). Economists in a Bloomberg survey had predicted a drop of 0.4%. Prices fell 5.3% from a year earlier, the same pace as the previous month.
“Investors have marked down their expectations for the future path of Bank Rate in recent months amid signs that underlying inflation pressures in the UK economy are finally easing,” said Robert Gardner, Nationwide’s chief economist. “If sustained, this will ease some of the pressure on those remortgaging or looking to buy a home.”
While borrowing rates on home loans have started to cool after jumping earlier in the summer, they are still at painfully high levels for Britain’s squeezed families. Bank of England data suggests that interest rates on new mortgages are more than triple their level in early 2022.
The property price slump and high mortgage rates will cause more headaches for Prime Minister Rishi Sunak as many homeowners will feel worse off the run-up to a general election expected next year. Economists expect a peak-to-trough fall of roughly 10%, suggesting the market is halfway through its downturn.
