Annual UK house price growth increased to 5.8% in October, the highest rate since January 2015, according to data from the latest Nationwide House Price Index.

The figures showed 0.8% month-on-month growth in October after taking account of seasonal effects, following a 0.9% rise in September, to bring the average house price to £227,826.

Nationwide suggested that the economic recovery has “lost momentum” in recent months with economic growth slowing sharply to 2.1% in August, down from 6.4% in July, despite a strong boost to the hospitality sector from the government’s Eat Out to Help Out scheme, which has since expired.

“Labour market conditions also weakened with the unemployment rate rising to 4.5% in the three months to August – still low by historic standards, but up from an average of 3.8% in 2019,” said Nationwide chief economist, Robert Gardner.

“Nevertheless, housing market activity has remained robust. Mortgage approvals for house purchase climbed to 91,500 in September – the highest level since 2007.

“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.”

In response to the Nationwide data, Bluestone Mortgages managing director, Steve Seal, commented: “While the housing market continues to recover from the impacts of the pandemic, it is likely that many customers – particularly those who face further financial hardship beyond October – will require additional support from lenders over the coming months.

“For these borrowers, this has the potential to impact their credit score and, subsequently, their ability to secure a mainstream mortgage in the future.

“This is why the specialist lending market will be essential for supporting underserved customers over the long term, providing them with financial solutions to cater for their specific needs.”

Trussle head of mortgages, Miles Robinson, suggested that a surge in housing activity has created a “bottleneck of transactions” when the market was already struggling with operational capacity, due to remote working and the processing of mortgage payment holidays.

“Delayed transactions, teamed with increased scrutiny from lenders, tighter criteria and a shrinking range of high LTV products is creating challenges within the market as people rush to find their dream home,” Robinson said.

“We’re calling on the government to guarantee the stamp duty holiday to anyone who has exchanged on a property by 31 March 2021. We believe this is the fairest way to support buyers and remove the high levels of uncertainty during this time.”

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