The rise in prices was a surprise to many, indicating that the market is healthier than previously thought,
Chief economic advisor to EY ITEM Club, Martin Beck, suggests that affordability in the market has improved with household earnings rising above inflation. He said:
“House prices unexpectedly rose in October on the Nationwide measure and by the largest amount since March 2022. Given the pressures facing the housing market, not least from higher mortgage rates, October’s increase may prove to be short-lived. But it reinforces the EY ITEM Club’s view that house prices are unlikely to see an outsized correction.
With pay growth still strong, the ratio of house prices to earnings has fallen, improving affordability on this measure. Meanwhile, healthy household balance sheets and a still-tight jobs market should keep mortgage defaults and forced sales down.”
