The UK housing market hit a milestone in October, with the average house price climbing to a record £293,999. This represents a modest monthly increase of 0.2 percent, matching consensus estimates and an annual growth of 3.9 percent, marking a slowdown from September's revised 4.6 percent. Despite higher interest rates, house prices have demonstrated resilience, reflecting a significant shift from the rapid 21 percent growth during the pandemic boom. Northern Ireland remains a standout performer, with the highest annual price growth in the UK.

Mortgage activity is on the rise, bolstered by falling rates - down over 160 basis points since summer - and sustained income growth. However, affordability challenges persist. Borrowing constraints may tighten as markets anticipate slower rate cuts from the Bank of England. Policy shifts, such as increased stamp duty for second homes, could temper demand further.

Looking forward, house prices are expected to maintain a subdued upward trend, reflecting a delicate balance between improving affordability and ongoing economic pressures. This suggests a steady but cautious market recovery into 2024. The UK RPI now stands at minus 25 and the RPI-P at minus 30, showing economic activity in general falling short of market expectations.

Prices are expected to rise a further 0.2 percent versus September when they increased 0.3 percent.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.