Annual house price growth has eased back to 10.0% in September, according to the latest Nationwide House Price Index.

This follows the 11.0% annual growth figure reported in August, and was still the fifth month in a row that annual house price growth remained in double digits.

Nationwide revealed that house prices grew on a monthly basis by a marginal 0.1% in September, which follows the 2.0% monthly growth last month.

The figures bring the average UK house price to £248,742, having dropped by £115 in the past month.

Commenting on the figures, Nationwide chief economist, Robert Gardner, highlighted that house prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming “more stretched”.

“Raising a deposit remains the main barrier for most prospective first-time buyers,” Gardner said. “A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.

“Due to the historically low level of interest rates, the cost of servicing the typical mortgage is still well below the levels recorded in the run up to the financial crisis. However, even on this measure, affordability is becoming more challenging.”

Gardner also said the outlook for the UK’s housing market for the rest of the year remains “uncertain”.

“Activity is likely to soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax,” he added. “Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises as government support winds down, as seems likely.

“But this is far from assured. The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic – such as wanting more space or to relocate – to continue to support activity for some time yet.”

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