The annual rate of house price growth has climbed to its highest level since February amid an ongoing shortage of property supply.
Halifax’s October House Price index shows annual growth reached 4.5 per cent during the month – up from 4 per cent the previous month and the fastest since February’s 5.7 per cent.
The average house price in the UK is now a record £225,826, according to Halifax.
But while annual growth was up, the monthly rate of growth slowed from 0.8 per cent to 0.3 per cent.
The latest annual increase comes despite a record drop in the public’s confidence in UK house prices, which has fallen to its lowest level since December 2012.
News of the rise also follows the Bank of England’s (BoE) decision to raise interest rates from their historic low of 0.25 per cent to 0.5 per cent in November – the first rate hike in a decade.
Halifax said it did not anticipate the BoE’s decision would have a major impact on the market.
Russell Galley, managing director, Halifax Community Bank, said: “The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, continues to support house prices and is likely to do so over the coming months.
“Increasing pressure on household finances and continuing affordability concerns are some of the factors likely to dampen buyer demand. That said, we do not anticipate the Base Rate rise will be a barrier to buying a house.”
According to the Royal Institution of Chartered Surveyors, new sales instructions for home sales fell for the 19th consecutive month in September.
New buyer enquiries also declined for the sixth month in succession, reaching the lowest level since July 2016.
Lucy Pendleton, founder director of independent estate agents James Pendleton, said: “We've since had a rate rise but what you're seeing isn't one last hurrah as people rush to grab the best mortgage rates. It's that same old ball and chain around the UK property market's neck - weak supply.
“The countdown on rates may have helped support demand but mortgage approvals were down. We know stiff competition for homes exists, but to see approvals and prices diverge in such dramatic fashion is surprising.”
Jonathan Hopper, managing director of Garrington Property Finders, pointed out that the national figures masked strong regional disparities.
He commented: “As the climate in London becomes ever more wintry, it’s springtime in many of the regions – with several local markets bursting into bloom as prices rise in response to brisk levels of demand.
“Underlying this shift is a steady flight of equity from London – and other overheated regions – to areas with greater affordability.
“The net effect is to put downward price pressure on many of the regions which saw the frothiest rates of growth during the boom. The pressure is most acute on high-value homes, for which demand has never properly recovered since the imposition of punitive rates of Stamp Duty three years ago.”