UK house prices have seen an increase for the third consecutive month in September, rising by 0.3%, which translates to an additional £859. This upward trend can be attributed to a decline in mortgage rates that has provided a boost to the property market.
According to a report from Halifax, there has been a notable year-on-year increase in prices, which have surged by 4.7%. This marks the strongest growth rate since November 2022, suggesting a potential recovery in the housing sector after a challenging period.
The current average property price now stands at £293,399, reflecting a slight increase from £292,540 in August. This latest figure represents the highest average price recorded since June 2022, indicating a return of buyer confidence in the market. It is also worth noting that the average price is now only marginally below the record high of £293,507, achieved in June 2022. This peak was reached just before the housing market began to slide in autumn 2022, following the economic impact of the mini-budget, which resulted in a rise in mortgage rates.
As the property market adjusts to changing economic conditions, these recent price increases may signal a shift in sentiment among buyers and sellers alike. With falling mortgage rates, many potential homeowners may feel encouraged to enter the market, potentially leading to further stability in house prices in the coming months.
For first-time buyers, the average amount spent on purchasing a home is now approximately £1,000 lower than it was two years ago. This decline underscores a notable shift in market dynamics, as more affordable options may be becoming available for those looking to enter the housing market.
Amanda Bryden, Head of Mortgages at Halifax, provided insight into the current housing market trends, stating, “UK house prices climbed for the third month in a row in September, with a slight increase of £859 in cash terms. The annual growth rate has edged up to 4.7%, which is a positive sign for the market. This brings the average property price close to the record high of £293,507 that was set in June 2022.”
This steady rise in house prices suggests that the property market is showing resilience after a challenging period. The increase in property values may encourage potential buyers to take advantage of the current market conditions before prices reach new highs. The affordability for first-time buyers could be a key factor in stimulating demand, as they represent a significant portion of the buyer demographic.
As the market continues to evolve, it will be interesting to see how these trends impact overall buyer sentiment and activity. With first-time buyers now able to enter the market at a more favourable price point, the hope is that this will contribute to a more balanced and accessible housing market in the future.
Bryden highlighted the importance of understanding these gains within a broader context, stating, “While the typical property value has increased by approximately £13,000 over the past year, it is essential to note that this rise mainly represents a recovery from the losses experienced in the previous year. In fact, over the last two years, prices have only seen a modest increase of just 0.4%, which equates to £1,202. This means that, while the recent upward trend is encouraging, it is crucial to recognise that the market is still stabilising after previous fluctuations.”
The housing market has shown signs of improvement throughout the summer months and into early autumn. This resurgence can be attributed to enhanced mortgage affordability, driven by robust wage growth and a decline in interest rates. These factors have significantly bolstered confidence among potential buyers, making it easier for them to consider purchasing a property. As a result, many individuals are re-entering the market, driven by the hope of securing a home in an environment that appears to be stabilising.
Moreover, the number of mortgages approved has surged by over 40% in the past year, reaching its highest level since July 2022. This increase indicates a growing demand for housing as buyers take advantage of improved lending conditions. Overall, these developments suggest that the housing market is beginning to regain momentum, and there is optimism that this trend may continue as more people feel confident in their financial situations and the overall economic landscape.
“While improved mortgage affordability is expected to encourage buyer activity—especially with anticipated further cuts to interest rates—housing costs continue to pose a significant challenge for many. Consequently, we anticipate that property price growth will remain modest for the rest of this year and into the next,” Bryden explained.
Northern Ireland has emerged as the top performer in the UK property market, experiencing an annual growth rate of 9.7% in September. The average price of a home in the region is now £203,593, making it the area with the strongest property price growth across the UK.
Wales is also seeing an uptick in demand within its property market, with prices rising by 4.4% year-on-year. The current average home value in Wales is £224,119, reflecting the growing interest in this region.
Scotland has recorded a more modest increase in house prices in recent months. The typical property in the region is now valued at £205,718, which reflects a year-on-year rise of 2.1%. This growth, while positive, indicates that the Scottish housing market is experiencing a slower pace of recovery compared to other parts of the UK. Factors such as local economic conditions and demand dynamics may be influencing this trend, resulting in a more cautious approach from potential buyers.
In England, the North West region has emerged as a standout performer in the housing market, claiming the title for the highest growth in house prices. Over the past year, prices in the North West have climbed by 5.1%, bringing the average property price to £234,355. This increase signifies a robust demand for housing in this area, possibly driven by its appealing lifestyle, affordability compared to other regions, and ongoing infrastructure developments that enhance its attractiveness.
Meanwhile, London continues to dominate as the region with the highest property prices in the UK. The average home in the capital is currently priced at £539,238, marking a 2.6% increase from the previous year. However, this figure still remains below London’s peak property price of £552,592, which was reached in August 2022. Despite this slight increase, many potential buyers and investors are observing the market closely, as the capital’s housing market shows signs of stabilisation following a period of fluctuations.
The variations in house price growth across the UK highlight the diverse nature of regional markets, with some areas thriving while others experience more modest gains. This landscape may present both opportunities and challenges for buyers and sellers navigating the property market in the coming months.
Nathan Emerson, the CEO at Propertymark, shared his insights on the recent developments within the housing market, highlighting the positive trends emerging over recent months. He stated, “It is encouraging to see continued growth in the housing sector. As we take a step back and look at the broader picture for the year, it’s evident that consumers are now approaching the buying and selling process with significantly more confidence compared to the very beginning of the year.”
Emerson acknowledged that while the market has made strides, there is still work to be done. “Although there is still progress to be made, we are observing strong hints that there may be further reductions in the base rate before the year comes to a close. This potential easing could have a substantial impact on the market dynamics.”
He went on to note that the increased confidence among lenders is already beginning to reflect in their offerings. “As a result, some lenders are feeling assured enough to adjust their mortgage products and terms, which is a very welcome development for borrowers. Improved mortgage options can facilitate greater access to home ownership and help more individuals step onto the property ladder.”
Emerson concluded by emphasizing the overall positive sentiment in the market, suggesting that these changes could lead to a more robust and resilient housing sector in the coming months.