Average UK houses prices rose by the fastest pace for two years during September, Nationwide data suggests.
The latest Nationwide House Price Index shows average UK property values rose by 3.2% annually in September and by 0.7% on a monthly basis, putting average values at £266,094. This is the fastest rate of growth since November 2022 when average values rose 4.4%.
But average prices still remain around 2% below the all-time highs recorded in summer 2022. It comes as falling mortgage pricing, August’s interest rate cut and hopes of more reductions continue to boost buyer demand.
Most UK regions saw a pickup in annual house price growth during September.
Northern Ireland recorded the highest level of growth, with average prices up 8.6% compared with the third quarter of 2023.
Average prices in Scotland rose 4.3% annually, while Wales saw a more modest 2.5% year-on-year rise.
Across England overall, typical prices were up 1.9%. The North West was the best performing English region, with prices up 5.0% year-on-year. London remained the best performing southern region with annual price growth of 2.0%. East Anglia was the only UK region to record an annual price fall, with prices down 0.8%.
Terraced houses have seen the biggest percentage rise in prices over the last 12 months, with average prices up 3.5% in September, according to Nationwide. Semi-detached homes and flats saw increases of 2.8% and 2.7% respectively, whilst detached houses saw more modest growth of 1.7%.
Robert Gardner, chief economist at Nationwide, said “income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”
Commenting on the index, Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said “plenty of new stock is coming to market, which is standard for this time of year, with well-priced properties attracting interest from buyers. We are agreeing a lot of sales at asking price, just under or even slightly over. While sellers may be encouraged by these price rises, we find if a property is too highly priced, applicants don’t waste their time and view. So if a property isn’t getting viewings, it is likely to be down to price, and the best advice we can give is to bring that price down to the market level.”
Tom Bill, head of UK residential research at Knight Frank, said “falling mortgage rates led to an increase in house price growth in September, with demand also boosted by buyers putting off decisions until after the election. However, the mood has since turned more cautious ahead of the Budget following suggestions by the government it will be painful. We think prices will end the year a few percent higher but sellers should be aware that buyer exuberance will be in short supply in the final months of the year.”
UK property market sees renewed confidence as house prices reach new heights
Rising to a two-year high, UK home prices indicate a robust comeback in the housing market after the economic upheaval and general unrest across the United Kingdom Liz Truss’s mini-budget generated.
Property values rising across the nation
Halifax claims that the average cost of a home increased by 0.3% last month, therefore increasing the average property worth to £292,506. Reflecting a comeback in buyer confidence as borrowing rates relaxed, this was the highest level since August 2022. House prices rose 4.3% annually, the biggest increase since November 2022.
In terms of regional performance, Northern Ireland saw the strongest growth in property values with a 9.8% increase, while Wales followed with a 5.5% rise. The North West experienced the highest growth in England, with prices climbing by 4%. Meanwhile, whether selling through a traditional estate agency or a quick house sale company like Sold, the capital continues to lead in property costs. London remains the most expensive area in the UK, with the typical house price at £536,056—up 1.5% from last year.
Easing interest rates and political shifts drive growth
Political events have also helped the housing market to remain robust. House seekers reacted favourably after Labour’s election triumph, generating more interest from sellers and buyers alike.
With houses sold for more than last year, estate agents in London experienced a surge in transaction numbers. Still, the effect of October’s budget is unknown as possible tax increases and changes to the Non-Dom system might affect outside investment.
Stable business was reported by Housebuilder Berkeley, which is still hopeful about its profit projections. The business promised to help the aim of producing 1.5 million new homes all throughout the UK and applauded the government’s initiative to speed housebuilding.
For many potential purchasers, affordability still presents a problem even with increasing costs. Nonetheless, the Bank of England’s recent choice to lower interest rates from 5.25% to 5% has helped to revive the market. This action encouraged lenders, notably Lloyds Bank, to provide more affordable mortgage choices including a new scheme letting first-time buyers borrow up to 5.5 times their family income. Approved in July alone, over 62,000 mortgages – the highest figure since September 2022.
HMRC data shows ‘strong’ property market ahead of Autumn Budget
HMRC recorded a ‘marginal’ decline in property sales during August but figures remain up on a yearly basis. The latest property transaction date from the taxman – based on Stamp Duty returns – shows there were 90,210 residential sales for August on a seasonally-adjusted estimate.
The figure is up by 5% annually but down less than 1% since July.
On a non-seasonally adjusted estimate, the figure is up 10% annually and by 8% on a monthly basis to 104,330.
The figures remain below pre-pandemic levels. It comes as mortgage rates and inflation have been falling, boosting buyer demand.
Iain McKenzie, chief executive of The Guild of Property Professionals, said “another ‘marginal’ fall in property sales should not spell disaster for the property industry, especially considering the healthy volume of sales we have seen so far this year. In many areas of the country, there is not enough good-quality, yet affordably-priced housing to meet the unprecedented levels of demand that estate agents are seeing. First-time buyers are choosing to sit tight, with hopes that market conditions will go in their favour.
For others, it is simply a case of affordability concerns. Saving for a deposit is challenging at the best of times, but with living costs still high, and energy prices set to increase this winter, it makes the process even more difficult. The Bank of England has made some cautious progress in lowering interest rates as a result of falling inflation levels in the past year. It is anticipated that it will continue to be much of the same as the year comes to a close, dashing hopes of a steep decline in mortgage rates and acting as a deterrent to first-time buyers.”
One potential stumbling block for the market is next month’s Budget.
McKenzie added “we are hopeful that there will be some practical changes that will help reassure sellers and get more people on the property ladder. Potential increases to capital gains tax may have panicked some landlords to sell up while rates are lower, however our members have not noticed a significant influx of available properties on the market.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added “although inevitably reflecting what was happening at least a few months ago, transactions are still a better indicator of market prosperity than more volatile prices. Activity remains surprisingly strong during a period when we might have expected worries about the economy, the election and mortgage rates to have blown it more off course.
Since then, inflation has settled and borrowing costs dropped a little and a measure of political stability has returned. However, more property choice and Budget concerns have meant significant change over the coming quarter at least is unlikely.”
Nathan Emerson, chief executive of Propertymark, said “the year to date has proven transformational in terms of consumers having greater confidence and flexibility to approach the buying and selling process. We have seen a sizeable uplift in market conditions with aspects such as inflation staying within targeted range and mortgage deals that demonstrate some lenders are feeling buoyant enough to bring far more competitive mortgage deals to their prospective customers already.
However, a lot will depend on base rate decisions over the coming months and the Bank of England will likely not be keen on undoing progress made so far by unrealistically lowering the base rate too rapidly.”