UK house prices increase for the third consecutive month

After rising for the third consecutive month in September, house prices are now within a whisker’s distance of their records highs.

Halifax, one the largest mortgage lenders in the country, has released the latest figures showing that prices rose 0.3 percent last month. This is the same as the rise seen in August.

Halifax estimates house prices rose by 4.7% over the last year. This is the highest rate of inflation seen since November 2022.

The average price of a house in the UK is £293,399; this is just £100 short of the previous record, set in June 20,22, before Liz Truss’s and Kwasi Kwarteng’s mini-budget derailed the housing market.

Amanda Bryden is the head of Halifax’s mortgages. She said: “It is important to put these recent gains into context.” The average property value rose by approximately £13,000 in the last year. This increase is largely due to the recovery of ground that was lost over the preceding 12 months. Prices have only increased by 0.4 percent in the past two years.

After the first lockdown, house prices soared as buyers who had been confined for weeks to their homes decided to spend their savings on bigger houses and larger gardens. This trend has been dubbed “the race for space”.

The market was brought to a standstill almost immediately following the mini-budget, which took place at the end September 2022. Truss and Kwarteng had unnerved the financial markets, and borrowing costs were sent soaring. The Bank of England increased interest rates in the following years, making mortgages more expensive.

In recent months, it has become clear that buyers are returning to the market now that rates have dropped, cost of living is subsiding and prices are rising again.

Bryden stated that “market conditions have improved steadily over the summer months and into early fall.” Mortgage affordability has improved due to rising wages and declining interest rates. The number of mortgages has increased by over 40% in the past year, and is now at its highest level since July 20,22.

Halifax’s data indicates that there is still a north-south gap, with the prices in northern Canada having to catch up to those further south.

House prices in the north-west of England have risen by 5.1% over the last year. In Yorkshire, they’ve risen by 4.3%. In contrast, eastern England’s commuter counties, such as Hertfordshire, and Essex, are seeing house prices rise much slower, by 2.3 percent compared to a year earlier.

Prices in London, the most expensive region to purchase a home are up 2.6% year-on-year, to an average price of £539 238, comfortably below the peak £552,592 in summer 2022.

Northern Ireland continues to be the UK region where prices have risen the fastest. They increased by 9.7 percent in the last year. In Scotland, the inflation rate is 2.1 percent.

Bryden stated that affordability has improved with the decline in mortgage rates, but “remains an issue for many”. She expects that any increase in the price of a house over the next few months will be modest.

Ashley Webb is a UK economist with Capital Economics. He believes that rates will fall faster than expected in the coming year. He said that he believes the Bank of England is likely to cut interest rates more than expected, which could lead to a rise in house prices of over 5% by 2025.