The UK property market showed signs of renewed momentum in September as house prices rose 0.5% compared with the previous month, according to data from Nationwide Building Society.

The increase exceeded Capital Economics’ forecast for a 0.2% rise and lifted the average home price to £271,995, reversing a 0.1% decline in August.

On an annual basis, price growth edged higher to 2.2% from 2.1%, marking a modest but notable improvement.

Robert Gardner, Nationwide’s chief economist, said the housing market now appeared to be entering a phase of “broad stability” after a subdued summer period.

“The number of mortgages approved for house purchase have been hovering at about 65,000 per month, close to the pre-pandemic average,” Gardner said.

He added that low unemployment, rising wages and strong household balance sheets were helping to support demand, while borrowing costs could moderate further if the Bank of England lowers rates in the coming quarters.

Regional picture shows wide variations

Nationwide’s quarterly data highlighted stark regional differences.

Northern Ireland recorded the strongest growth, with prices rising 9.6% in the three months to September.

In contrast, England saw growth slow to 1.6%, down from 2.5% in the previous quarter, underscoring the patchiness of the recovery.

Karen Noye, a mortgage expert at Quilter, said that while conditions had improved slightly thanks to easing inflation, affordability remained a key barrier.

“The market is still just grinding forward rather than racing ahead,” she said. “Any progress is likely to be gradual.”

Interest rates and budget uncertainty weigh on confidence

The Bank of England voted last month to keep rates steady at 4%, after five cuts since last summer helped ease some of the strain on borrowers.

Governor Andrew Bailey, however, urged caution, citing persistent inflation, which remained at 3.8% in August.

Jason Tebb, president of OnTheMarket, said that while lower borrowing costs had helped restore momentum, uncertainty ahead of the government’s upcoming budget continued to weigh on sentiment.

“Activity is steady with focused buyers and sellers proceeding with their moves,” he said. “But average prices are being held in check, with buyers using their position to negotiate.”

Some analysts say buyers are waiting for clarity on possible tax changes.

Amy Reynolds of the estate agency Antony Roberts noted that the budget, due on 26 November, was already influencing activity.

“Many are now waiting for what the budget might bring,” she said.

Outlook tempered by affordability constraints

Speculation has mounted that Chancellor Rachel Reeves may overhaul property-related taxes, with proposals including a levy on home sales above £500,000.

Such measures could weigh on demand in higher-value markets.

Separately, housebuilder Taylor Wimpey told investors on Wednesday that its net private sales rate had slowed to 0.65 per outlet per week in the nine weeks to 28 September, compared with 0.7 in the same period a year earlier.

The company said the delayed budget was dampening near-term buyer confidence.

While September’s uptick offers reassurance that the market has avoided a sharp downturn, analysts caution that affordability constraints, high prices and fiscal uncertainty may limit the scope for further gains in the months ahead.

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