UK Housing Prices Experience Marginal Increase Amid Market Optimism in October

According to a report from real estate website Rightmove, there was a slight increase in the asking prices in the UK housing market in October, with prices rising by 0.3%. This increase was below the typical 1.3% monthly rise for October. Additionally, there was a 12% increase in the number of homes for sale compared to last year, marking the highest supply level per estate agent since 2014.

Despite the modest increase in asking prices, overall market activity remains strong, with a consistent growth in buyer demand. Compared to the same period last year, prices have risen by 1.0%.

Rightmove's director of property science noted that some prospective buyers have adopted a wait-and-see approach, anticipating further reductions in borrowing costs from the Bank of England and clarity from the upcoming government budget. Despite concerns about affordability, he expressed optimism about the market's trajectory towards 2025, suggesting that post-budget clarity and expected Bank Rate cuts could lead to a wave of market optimism similar to what was experienced in the summer.

The upcoming budget, set to be announced by the UK's finance minister Rachel Reeves on October 30, is expected to impact the housing market with potential changes in taxes. While some taxes are anticipated to rise, Reeves confirmed that taxes on "working people" would not be increased. The Times newspaper reported that an extension of the deadline for current stamp duty thresholds is unlikely.

Moreover, the Bank of England is expected to cut the benchmark Bank Rate at its November meeting, and possibly again in December. This follows the first reduction in borrowing costs in over four years in August, which led to a decline in mortgage rates. However, Rightmove noted that the decline in mortgage rates has slowed, with the average 5-year fixed mortgage rate increasing from 4.55% the previous week to 4.61%, marking the first weekly increase since May.