House prices in the UK increased by 0.1% in October, when taking account of seasonal effects, Nationwide has found.

The building society’s house price index revealed the average price of a house now stands at £265,738.

Year-on-year, prices increased by 2.4% in October, a drop from 3.2% in September.

Chief economist at Nationwide, Robert Gardner, noted that the housing market activity has remained "relatively resilient in recent months", with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment.

He said: "Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.

"Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth."

The news comes after the Chancellor announced that the temporary increase in the nil rate stamp duty thresholds in England and Northern Ireland would expire on 31 March 2025 and would revert back to previous levels set out by the previous Conservative Government.

From this date, first-time buyers purchasing a property under £500,000 would see the nil rate band threshold fall from £425,000 to £300,000, while for other residential buyers, the nil rate band threshold will decline from £250,000 to £125,000.

Gardner added: "The main impact of the stamp duty changes is likely to be on the timing of property transactions, as purchasers aim to ensure their house purchases complete before the tax change takes effect. This will lead to a jump in transactions in the first three months of 2025 (especially March), and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes."

He stated that data from June 2024 suggests that stamp duty will affect around one in five first-time buyers, although this impact will "vary significantly across the country", due to a difference in regional house prices.

Gardner concluded: "The largest effects are likely to be in the south east of England, where 40% of first-time buyers paid between £300,000 and £425,000 for their homes, where the change will increase cost of moving for the affected first-time buyers by £2,900 on average.

"The areas least affected are Yorkshire & The Humber, the north of England and Northern Ireland, where less than 10% of first-time buyers paid between £325,000 and £425,000 for their homes. Moreover, as the chart shows, the additional tax paid by affected first time buyers in these regions will, on average, be lower than in London and the south east."

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