Residential property prices increased in October for the first time in six months, according to the Halifax, but the mortgage lender expects values to fall over the next year.

The latest figures reveal that property prices rose 1.1% last month, taking the average property value to £281,974, fuelled in part by a supply-demand imbalance in the market, despite new buyer applications remaining historically low.

Halifax expects home prices to fall until 2025, with purchases facing higher interest rates and cost of living pressures.

House prices in October were down 3.2% from the corresponding period last year, Halifax’s data showed.

“Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale,” said Kim Kinnaird, director of Halifax Mortgages.

“This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall.”

The price increase in October complimented the findings of rival lender the Nationwide, which said last week that property prices rose 0.9% last month.

Reflecting on the latest data from Halifax, Purplebricks CEO, Sam Mitchell, said: “We’ve seen an unexpected boost in October following a quiet September. The Bank of England held its nerve on interest rates, an extremely positive decision for the housing market, which has caused an uptick in demand for the last week of September and through October, and with a second hold this month we expect the trend to continue.

“Banks are increasingly competitive in the rates offered to consumers, causing an increase in activity that, while perhaps too late to affect this year’s data dramatically, bodes well for a good start to 2024. After a difficult year, customers and estate agents alike can be optimistic about the state of the sector.

“Yet, as we gear up to the general election, any political noise about potential stamp duty cuts has the potential to derail this fragile progress in the market. Either act now or not at all – if people think there is a chance that rates might be cut then this could wrongly and unnecessarily delay their purchasing decisions.”

Iain McKenzie, CEO of The Guild of Property Professionals, believes there are “clear signs of vitality in the property market” as we come to the end of the year.

He commented: “Breaking the spell of six consecutive months of declining house prices is welcome news for sellers who currently have their home on the market.

“The demand for good-quality housing remains constant, especially as millions of first-time buyers feel trapped in a rental market which is becoming increasingly unaffordable.

“Sellers should be reassured by the stability in house prices we are currently seeing. While you may not receive the same offer you would have this time last year, properties are still worth considerably more than pre-pandemic levels.

“The upcoming Autumn Statement could introduce some incentives for potential buyers to get their foot on the property ladder.

“It is likely that we will see an extension of the mortgage guarantee scheme for a further year, although this will have little impact for smaller income households that cannot afford the vast majority of properties available to them. Another form of incentive such as a new help-to-buy scheme could go some way towards solving the problem for first-time buyers.”

Foxtons CEO, Guy Gittins, concurred: “While higher borrowing costs continue to present a challenge for the nation’s homebuyer, the property market remains ripe with opportunity for those who can overcome the initial hurdle of securing a mortgage offer and buyers and investors can still find good finance deals when working with a professional broker.

“The Bank of England’s decision to hold the base rate for a second consecutive time will only help to boost buyer confidence further and this increasing stability puts the property market in very good stead come January.”

The CEO of Yopa, Verona Frankish, added: “The figures provide further proof that the property market has responded well to the Bank of England’s initial decision to freeze interest rates. With this remaining the case last week, we could well see a stronger finish to the year than many would have previously anticipated.

“Yes, the cost of borrowing remains high, but a static base rate will at least allow buyers to better ascertain their position in the market, giving them a stronger chance of making it through to completion before the goal posts are moved with respect to their mortgage offer.”