British house prices rose in October at the fastest pace in more than two years, according to a survey that on Thursday that mostly reflected sentiment before finance minister Rachel Reeves published her budget at the end of the month.

The Royal Institution of Chartered Surveyors said its house price balance rose to +16 from +11 in September, its highest level since September 2022, when the economic plans of former prime minister Liz Truss sent mortgage markets into a spin.

RICS' survey was conducted between Oct. 21 and Nov. 7, with about two thirds of the responses coming before Reeves announced a budget on Oct. 30 that contained big increases in tax, spending and investment.

While RICS said the outlook painted by the survey was brightening - with price expectations for the next three months at +20 in October, up from +12 in September - that could yet change.

"The rise in bond yields following the Budget, alongside a general increase in ... interest rate expectations over the past couple of weeks, will likely present something of a headwind for the market to contend with over the short term," said Tarrant Parsons, head of market analysis at RICS.

The Bank of England cut interest rates last week for only the second time since 2020 and said future reductions were likely to be gradual as it predicted the new government's first budget would lead to higher inflation and economic growth.

RICS said the picture appeared to be worsening for renters, with demand remaining strong but rental properties disappearing from the market.

Mortgage lenders Halifax and Nationwide both reported monthly increases in house prices during October. (Reporting by Andy Bruce; editing by David Milliken)