The Nationwide Building Society has reported little change in UK house price growth in October.
Annual house price growth remained below 1% for the 11th month in a row in October, at 0.4%.
Robert Gardner, Nationwide’s chief economist, said: “Average prices rose by around £800 over the last 12 months, a significant slowing compared with recent years – for example, in the same period to October 2016, prices increased by £9,100.
“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty. To date, the slowdown has centred on business investment, while household spending has been more resilient.
“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years.
“Solid labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook. The question is whether this pattern will continue.
“There were tentative signs of a softening in the jobs market in the three months to August, as employment fell, unemployment rose, and wage growth slowed a little. If this trend continues it would be a significant concern, as the labour market has been the key factor underpinning the resilience of the household sector in recent years.
“However, monthly data is often volatile and the unemployment rate remains close to 40 year lows and real earnings growth (i.e. after taking account of inflation) is close to levels prevailing before the financial crisis.
“If Brexit uncertainty lifts in the months ahead, hiring is likely to recover, although there may be some upward pressure on mortgage rates as investors once again contemplate the potential for UK rate increases in the years ahead. However, in the near term such increases are likely to be capped by trends in global financial markets. Weak global economic prospects continue to exert downward pressure on long- term interest rates around the world – including the UK.
“Moreover, mortgage rates remain close to all-time lows – more than 95% of borrowers have opted for fixed rate deals in recent quarters, around half of which have opted to fix for five years.”
Mark Harris, chief executive of SPF Private Clients, added: “House price growth remained subdued in October and it comes as no real surprise. While Brexit uncertainty continues, people don’t want to make big decisions about moving home unless they absolutely have to. It is hard to see how this will change until there is more certainty and some resolution politically, either way.
“Those who are taking out mortgages or remortgaging are taking advantage of cheap fixed rates with half of these choosing to secure their deal for the medium-term of five years. This suggests that borrowers are concerned about the future movement of interest rates, while at the same time are taking advantage of the price war among lenders, resulting in rock-bottom rates.
“This is encouraging because if rates do rise, most borrowers will be able to ride out the storm and benefit from manageable mortgage payments.”