It is hard to reconcile the somnolent levels of activity in the housing market with today’s surprise uptick in house prices in October.
According to Nationwide the average price across the UK was 0.9% higher in October than in September when mortgage approvals for purchases were 30% below the monthly average.
Of course demand for home loans only tells half the story, particularly in London where cash buyers and foreign investors will always put a floor under prices when they sniff a bargain. Close to full employment means there are few forced sellers.
Many homeowners with an inflated idea of what their property is worth are still prepared to sit it out and wait for the incoming tide to lift prices once again.
The Nationwide figure could be a rogue blip, it is after all just a single month’s data. But if the trend is confirmed by other house price indices over the coming months, it is going to lead to rapid reworking of some of the more alarming forecasts of house price slumps this year. The UK market is now down only 3.3% on a year ago in cash terms, though much more when inflation and earnings growth are taken into account.
It must be hugely frustrating for young buyers hoping for a Nineties-style crash to bring the bottom rung of the ladder down to within reach.
That does now not look likely, at least not in this cycle. It will be a long time — perhaps another year — before the Bank of England starts to cut the cost of money but market mortgage rates are still slowly subsiding. Perhaps more importantly the market appears to be stable. That will encourage more nervous buyers to emerge from their fox holes where they have been sheltering since the mini-Budget, a trend likely to be accelerated by tomorrow’s near-certain decision to hold rates once again.
