UK house prices rise again nearing record high as interest rates fall, Halifax says
UK house prices have risen again, nearing a record high as interest rates decline, according to the nation’s largest lender.
Halifax says prices increased by 0.3% month-on-month in September, matching a rise seen in August.
Year-on-year price growth was 4.7%, the strongest rate since November 2022.
The average house price was £293,399, just shy of a record high of £293,507 set in June 2022.
Northern Ireland continues to record the strongest annual house price growth, with prices up by 9.7% year-on-year, Halifax said.
The average price of a property in Northern Ireland is now £203,593.
Scotland was the weakest performing region, with prices rising by 2.1% over the year to £205,718.
The North West once again recorded the strongest house price growth of any region in England, up by 5.1% over the last year, to sit at £234,355.
London continues to have the most expensive property prices in the UK, now averaging £539,238, up 2.6% compared to last year.
However, this is still some way below the capital’s peak property price of £552,592 set in August 2022.
Overall, across the UK, prices were up 1.6% compared with the third quarter of 2024.
The average amount paid by first-time buyers has increased by 4.2% over the past year, or £9,409 in cash terms, the report said.
This brings the typical first-time buyer property price up to £232,769 – the highest level since May 2024.
The amount is still around £1,000 less than the average amount paid by a first-time buyer two years ago, at £233,760.
Amanda Bryden, head of mortgages at Halifax, said: “It’s essential to view these recent gains in context.
“While the typical property value has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months.
“Looking back two years, prices have increased by just +0.4% (£1,202).
“While improved mortgage affordability should continue to support buyer activity – boosted by anticipated further cuts to interest rates – housing costs remain a challenge for many.
“As a result we expect property price growth over the rest of this year and into next to remain modest.”
Here are the average prices in the three months to September and their annual change, according to Nationwide:
- East Midlands – £241,873 up 3.1%
- Eastern England – £333,042 up 2.3%
- Greater London – £539,238 up 2.6%
- North East – £171,338 up 2.4%
- North West – £234,355 up 5.1%
- Northern Ireland – £203,593 up 9.7%
- Scotland – £205,718 up 2.1%
- South East – £387,638 up 2.9%
- South West – £303,747 up 3.3%
- Wales – £224,119 up 4.4%
- West Midlands – £255,148 up 3.3%
- Yorkshire and Humber – £210,116 up 4.3%
WHAT IT MEANS FOR YOU
The figures published today show that the housing market is proving pretty resilient.
Verona Frankish, chief executive of Yopa, said: “The property market has bounced back following a period of prolonged uncertainty caused by higher interest rates.
“Whilst they remain considerably higher than many homebuyers will have become accustomed to in recent years, we’re now seeing buyers return with confidence following the base rate cut seen in August.”
The Bank of England (BoE) cut the base rate from 5.25% to 5% in August, before holding them at this rate again in September.
As a result of the recent reduction, lenders have already started to follow suit and drop their fixed rates to below 4%.
Guy Gittins, chief executive of Foxtons, said: “Increased mortgage market certainty is allowing UK buyers to act with greater confidence and we’ve seen the rates available on many mortgage products continue to trend downwards since a hold on the base rate in September of last year.
“Not only has this helped to accelerate the rate of house price growth being seen across the UK property market, but we’re now seeing transactional volumes climb as these sales make it over the line.”
However, some experts say house price recovery is not “rocket-fuelled”.
Jonathan Hopper, chief executive of Garrington Property Finders, added: “The recovery is real but not rocket-fuelled. Average property prices across the UK are back within touching distance of the all-time high the Halifax recorded in June 2022, but the pace of progress varies widely across the UK.
“There’s a clear north-south split in England, with prices in the North West rising at double the speed of those in London.
“In the capital’s prime and super-prime markets, we’re seeing prices hold steady and even tick down in some areas.”
The next BoE base rate review is scheduled for Thursday, November 7.
What’s next for house prices?
Tom Bill, head of UK residential research at Knight Frank, expects September’s level of market activity to continue in October but “drift lower” as the months continue.
He said: “The last two years have underlined the close relationship between mortgage rates and house prices – as one goes up the other goes down.
“We expect low single-digit price growth this year as rates continue to drift lower, with the Budget the main cause of uncertainty on the horizon.”
Matt Thompson, head of sales at London-based estate agent Chestertons, added: “We expect this level of market activity to continue and could see an additional boost in buyer motivation if the Bank of England decides to cut interest rates in November.”
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Who else tracks house prices?
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, cash buyers are not included.
Rightmove and Zoopla also publish monthly house price data.
The former is based on asking prices from the property listings on its website.
The latter uses sold prices, mortgage valuations and data on agreed sales.
Neither takes into account the price a property actually sold for like the ONS Land Registry, which could end up being higher or lower and some might not even sell at all.
Here’s the latest data from other indices:
- Nationwide (September 2024) +0.7% monthly, +3.2% annually
- Rightmove (September 2024) +0.8% monthly, +1.2% annually
- Zoopla (August 2024) +0.3% monthly, +0.5% annually
- ONS Land Registry (July 2024) +2.2% monthly, +2.2% annually