House prices rose at the fastest annual pace since 2022 as lower mortgage costs fueled a rebound in the property market.
The average price of a typical UK home rose 0.3 per cent last month to £292,505 – just £1,000 short of the record high of £293,507 reached in June 2022, according to the Halifax house price index.
The increase came after the Bank of England cut rates from a 16-year high at the start of August and is expected to reduce them once more before Christmas, adding to growing optimism over the housing market improving this autumn.
Amanda Bryden, head of mortgages at Halifax, said: “Recent price rises build on a largely positive summer for the UK housing market. Prospective homebuyers are feeling more confident thanks to easing interest rates.
“That optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years.”
“With market activity picking up and the possibility of further interest rate reductions to come, we expect house prices to continue their modest growth through the remainder of this year.”
Northern Ireland continues to record the strongest property price growth of any UK nation or region, lifting 9.8 per cent on an annual basis in August. The average price of a property in Northern Ireland is now £201,043.
House prices in Wales also recorded strong growth, up 5.5 per cent on the same period last year with properties now costing an average of £224,433. Scotland saw a modest 1.7 per cent where a typical property now costs £205,144.
Houses in the north-west recorded the strongest house price growth of any English region, up by 4 per cent over the last year, to sit at £232,917. Halifax said London continues to have the most expensive property prices in the UK, now averaging £536,056, up 1.5 per cent year on year.
Other housing market measures have also shown momentum picking up, although rival mortgage lender Nationwide reported a small month-on-month drop in house prices in August, rather than a rise.
Nathan Emerson, of Propertymark, the property professionals body, said: “It is reassuring to witness the market moving forward from what has been a very fluid few years, where household affordability has been at near breaking point for many people.
“As the benefits of lower inflation and interest rates fully start to bed in, Propertymark is confident there will be further market growth as the year plays out. We are, however, keen to see the UK Government’s housebuilding programme spring into action to help alleviate the ongoing mismatch between supply and demand, as it is essential to keep pace with an ever-growing population.”
Alice Haine, analyst at Bestinvest by Evelyn Partners, said more properties were coming on to the market. “Strong demand for properties is being matched by a surge in listings as sellers, previously sitting on the sidelines as they waited for market conditions to improve, are now making a move. Providing the economy continues its recovery, with robust economic growth recorded in the first half of the year and inflation falling to more palatable levels, housing market activity is expected to continue strengthening in line with easing affordability levels.
“That’s not to say that an expected uplift in inflation in the final few months of the year on the back of rising energy prices or a potential slowdown in the pace of interest rate cuts won’t create a few stumbling blocks along the way.
“With the housing market generally in better shape than it was little over a year ago when mortgage rates were still alarmingly high, all eyes will be pinned on the next interest rate decision later this month. The good news is that many major lenders have already begun trimming their headline deals.“
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