The UK's largest mortgage provider has stated that although the average price of a property is at an all-time high, initiatives in Rachel Reeves's budget may cause demand to stall.

The typical property cost £293,999 in October, the highest amount ever recorded, surpassing the £293,507 set in June 2022, according to Halifax's monthly house price index.

The annual growth rate increased from 4.6% in September to 3.9% in October, marking the fourth consecutive month of gain.

The data indicates that purchasers dismissed worries about the contents of the chancellor's first budget, which was presented at the end of October. Halifax did note that the speech's initiatives may have an impact on demand in the future.

Amanda Bryden, the head of mortgages at Halifax, said that, while it was a surprise that house prices had passed the level seen in June 2022, particularly with the headwind of higher interest rates, it was more noteworthy that prices had not fallen significantly since that point.

In June 2022 the country was coming out of the pandemic, with pent-up demand to buy homes and a “race for space”, she said.

Halifax also said market activity had improved recently, despite the continued affordability challenges around higher mortgages, with the level of mortgages agreed at its highest level in two years.

However, Bryden said the rate at which mortgage rates will continue to fall will be hindered by policies put forward by Reeves in her budget last week.

“Following the budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer,” she said. “New policies, like higher stamp duty for second-home buyers and a return to previous thresholds for first-time buyers, might also affect demand.”

While the lender expected house prices to keep growing, that growth would be “at a modest pace for the rest of this year and into next”.

In England and Northern Ireland, Reeves increased stamp duty on buy-to-lets and second homes from 3% to 5% and scrapped the temporary increase on purchase price for nil rate of stamp duty, the sale figure before consumers have to start paying the tax. The nil rate for first-time buyers will decrease from £450,000 to £300,000, and for those buying an additional home from £250,000 to £125,000.

Northern Ireland continued to be the area of the UK with the highest price growth, with the average property costing £204,242, up 10.2% on the previous year.

The north-west was the region of England with the strongest price growth, up 5.9% on last year, with properties now costing £235,587 on average.

In London the average property now costs £543,308, up 3.5% on last year.