Halifax has reported that the average property price in the UK for July was £291,268, marking a 0.8% increase from June’s average of £289,042. This rise in house prices comes after a period of slower growth, with previous months showing only modest increases between 0.1% and 0.2%.
The annual growth rate for July has climbed to 2.3%, which is the highest level recorded since January of this year. This uptick indicates a rebound in the housing market after several months of subdued activity.
Halifax attributes this positive trend to recent adjustments in the mortgage market. The recent reduction in the Bank of England base rate, combined with lower mortgage rates from major lenders, is expected to sustain growth in property values throughout the rest of the year.
Amanda Bryden, Halifax’s head of mortgages, highlighted that these changes are encouraging for potential homebuyers and those looking to move up the housing ladder. The improved affordability due to lower mortgage rates is seen as a key factor driving increased market activity and boosting confidence among buyers.
Amanda Bryden commented, “With the recent reduction in mortgage rates and the potential for further cuts in the base rate, we anticipate a continued modest rise in house prices for the remainder of this year.” She highlighted that the Bank of England’s move to lower rates could provide more opportunities for homebuyers and support the housing market’s gradual recovery.
The Bank of England’s decision to lower the interest rate from 5.25% to 5% represents the first reduction in four and a half years. This move is aimed at stimulating economic activity and easing borrowing costs. However, the Bank has indicated that savers should not expect substantial cuts in the near future. The goal is to balance economic support while keeping inflation in check, preventing a return to the high inflation rates experienced over the past two years.
In response to the changing interest rate environment, several major banks have adjusted their mortgage rates. Recently, Halifax, NatWest, and Santander have reduced their rates by up to 0.20 percentage points. Additionally, Nationwide, the UK’s largest mortgage lender, has begun offering mortgage deals with rates below 4% for certain new buyers. These adjustments reflect the banks’ response to the lower base rate and could further impact the housing market by making home financing more affordable.
Sam Mitchell, Chief Executive of Purplebricks, remarked, “The recent boost in confidence within the housing market has been significantly accelerated by the Bank of England’s decision to cut interest rates. This move has prompted lenders to lower their mortgage rates, leading to a surge in buyers who are now moving forward with purchases that they had previously postponed.”
Mitchell added that the rate cut has revitalised the market, as many buyers who had been waiting on the sidelines are now taking action. However, he acknowledged that despite this positive development, mortgage rates are still considerably higher compared to the period before and just after the coronavirus pandemic.
Amanda Bryden, Head of Mortgages at Halifax, echoed these concerns. She pointed out that while the recent rate cut is encouraging, affordability issues and a persistent shortage of available properties remain significant obstacles for prospective homeowners. These factors continue to limit the ability of many individuals to enter or move within the housing market.
London remains the most expensive property market in the UK, with the average home in the capital priced at £536,052, reflecting a 1.2% increase from the previous year.
In contrast, Northern Ireland saw the largest increase in property prices, with the average cost of a home rising 5.8% to £195,681 in July. The north-west of England followed closely, with prices climbing by 4.1% to £232,489 over the same period.
Amy Reynolds, Head of Sales at Antony Roberts in Richmond, London, commented on the current market conditions: “August has started unexpectedly busy in our offices. The recent interest rate cut and the resolution of election uncertainties have been well received by both buyers and sellers.”
Reynolds cautioned that while lower mortgage rates may benefit buyers, they could also lead to higher asking prices. She noted that if more buyers enter the market due to reduced mortgage costs, this could push property prices even higher.
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