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UK house prices fall 0.6% in October amid BoE rate hikes

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  //house-home.news-articles.net/content/2025/11/1 .. ces-fall-0-6-in-october-amid-boe-rate-hikes.html
  Published in House and Home on Monday, November 17th 2025 at 4:36 GMT by London Evening Standard

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House Prices, Autumn Budget, and the Changing Landscape of the UK Housing Market

The latest article from The Standard provides a comprehensive snapshot of the UK property market as it stands at the close of autumn 2023, and how the newly released Autumn Budget is poised to shape the trajectory of house prices in the months ahead. Drawing on recent data from the Land Registry, the Bank of England, and industry experts, the piece explores why house price growth has slowed, the impact of rising mortgage rates, and the policy measures the Treasury is rolling out to support buyers and the wider economy.

1. A Slowing Pulse in the Property Market

The headline data – a headline figure from the Land Registry – shows that the average price of a private residential property fell by 0.6 % in October, marking the third consecutive monthly decline since September. Over the last twelve months, prices have actually dipped by 3.4 %, the steepest annual contraction since the market’s early 2020 pandemic rebound. The article points out that this dip is largely a reflection of the Bank of England’s “hard‑landing” strategy: the Bank’s rate hikes in the last two quarters have pushed mortgage rates up to levels not seen since the early 1990s.

The article also highlights that the percentage of “negative” price growth – where a property’s price falls year‑on‑year – has risen to 12 % of all sales, up from 9 % in the same month a year earlier. This is the largest proportion since the 2008‑09 crisis. While the drop is modest on a monthly basis, the cumulative effect of a higher interest‑rate environment is evident.

2. The Autumn Budget – A Mixed Bag for the Housing Sector

The Autumn Budget, delivered on 7 November, was framed around a “fiscal consolidation” narrative: a modest rise in the fiscal deficit to £71 billion and a plan to taper the generous 2023‑24 “budget cycle” of tax cuts and welfare measures. However, the Treasury introduced a number of measures with direct implications for the housing market:

The article stresses that while the Treasury is not offering a direct “price‑cap” or a new “affordability tax,” the combination of a higher deficit and a slower economic outlook may temper any rapid rebound in house prices.

3. Mortgage Market Dynamics

One of the central themes of the article is how the Bank of England’s policy decisions are filtering through the mortgage market. The latest data from the Mortgage Lenders Association (MLA) shows that the average rate for a standard variable rate (SVR) mortgage rose to 5.7 % in October – a 1.5 % increase over the year. Fixed‑rate mortgages, which many homeowners lock in for 2‑5 years, have also been hit: the 5‑year fixed rate is now 4.9 %, up from 3.2 % in late 2022.

The article explains that the surge in rates is a double‑edged sword:

• Affordability Decline: For a typical 200 k home, monthly repayments have jumped from roughly £750 to £860 on a 25‑year fixed rate, eroding affordability for the average buyer.
• Supply‑Demand Imbalance: Higher rates mean fewer buyers are willing or able to purchase, reducing transaction volumes and thereby putting downward pressure on price growth.

Industry experts quoted in the piece – including a senior analyst at RICS – predict that the “tightening” will persist until at least the end of 2024, when the Bank of England may consider a pause in rate hikes if inflation stabilises.

4. First‑Time Buyers and the Role of the Government

The Budget’s extension of the Help‑to‑Buy scheme, which has already assisted more than 200,000 buyers since 2018, is seen as a vital lifeline. The article details how the scheme now offers a 5 % equity loan for properties up to £600 k, a step up from the previous 4 % cap. This change is expected to boost demand in the lower‑to‑mid‑range property sector, where first‑time buyers spend most of their budget.

Additionally, the Treasury’s announcement of a “Housing Allowance” for low‑income renters could indirectly affect house prices. The allowance, estimated at £200 per month, is intended to ease pressure on the rental market, possibly reducing the demand for buy-to-let investment and keeping house price inflation in check.

5. Regional Variations and Sectoral Outlook

The article highlights that not all regions are experiencing the same price dynamics. The West Midlands and the North of England, for example, have seen smaller declines in house prices (around 1 %) compared with the South East and London, where prices have fallen by over 5 %. The author attributes these differences to varying local economic conditions, job growth, and the availability of affordable housing stock.

The piece also notes that construction activity remains a key factor in the market’s future. A recent report from the Housing Association's national board projects a 4 % increase in new builds in 2024, though this will be tempered by higher construction costs due to the rising VAT on building materials.

6. Looking Ahead – Forecasts and Caveats

Closing the article, the author pulls together several forecasts:

• House Price Growth: The RICS and Land Registry are predicting a modest 0.5 % rise in the next twelve months, conditional on the Bank of England maintaining its “hawkish” stance.
• Mortgage Rates: The Bank of England is likely to keep rates above 5 % until Q4 2024, implying that affordability pressures will persist.
• Government Interventions: The extension of HTB and potential introduction of new housing‑allowance schemes could provide pockets of relief, especially for first‑time buyers.

The author stresses that while the Autumn Budget contains some measures aimed at easing pressure, the overall trajectory of the housing market remains cautious. A tighter fiscal stance, coupled with the continued rise in mortgage rates, suggests that any significant rebound in house prices is unlikely in the near term. Instead, the market may see a plateau or modest decline until inflation and interest rates stabilise later in 2024.

Bottom Line

The Standard’s in‑depth analysis presents a clear narrative: the UK housing market is grappling with a combination of higher borrowing costs, a slower economic backdrop, and policy measures that both support buyers and impose fiscal constraints. While the Autumn Budget offers incremental relief for first‑time buyers and some renters, the broader environment suggests that house price growth will remain subdued until the economic conditions – especially interest rates – begin to ease. The article thus serves as an essential read for anyone looking to understand the current pulse of the property market and the likely course of events in the coming months.