British House Prices Rise in October

(Reuters) – British house prices rose in October at the fastest pace in over two years, according to a survey released on Thursday. This increase mostly reflected sentiment before Finance Minister Rachel Reeves published her budget at the end of the month.

The Royal Institution of Chartered Surveyors (RICS) reported that its house price balance rose to +16 from +11 in September, marking its highest level since September 2022, when the economic plans of former Prime Minister Liz Truss caused turmoil in the mortgage markets.

Conducted between October 21 and November 7, RICS' survey showed that about two-thirds of responses came before Reeves announced a budget on October 30 that included significant increases in tax, spending, and investment.

While the RICS report suggested a brightening outlook—with price expectations for the next three months rising to +20 in October from +12 in September—there are concerns it could change.

Tarrant Parsons, head of market analysis at RICS, stated, "The rise in bond yields following the Budget, alongside a general increase in interest rate expectations over the past couple of weeks, will likely present something of a headwind for the market to contend with over the short term."

The Bank of England reduced interest rates last week for only the second time since 2020, forecasting gradual future cuts, predicting the new government's first budget would lead to higher inflation and economic growth.

RICS also noted a worsening situation for renters, as demand remained strong but rental properties were dwindling.

Mortgage lenders Halifax and Nationwide reported monthly increases in house prices during October.