Recent price rises build on a “largely positive summer” for the UK housing market. Prospective homebuyers are feeling more confident due to easing interest rates and that optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years, said Head of Mortgages at Halifax.
HMRC monthly property transaction data shows UK home sales decreased in July 2024 compared to the previous month. UK seasonally adjusted (SA) residential transactions in July 2024 totalled 90,630 – down by – 0.6% from June’s figure of 91,220 (up +6.9% on a non-SA basis). Quarterly SA transactions (May 2024 – July 2024) were approximately +5.1% higher than the preceding three months (February 2023 – April 2024). Year-on year SA transactions were +6.7% higher than July 2023 (+13.2% higher on a non-SA basis).
Latest Bank of England figures show the number of mortgages approved to finance house purchases increased slightly in July 2024, by +2.3% to 61,985. Year-on-year the figure was +26.5% above July 2023.
The RICS Residential Market Survey results for July 2024 show a stable trend in market activity. New buyer enquiries has a net reading of +2%, up from -6%, with agreed sales also up to -2%, from -6%. New instructions are back in positive territory at +2%, from -9%.
What’s more, Northern Ireland continues to record the strongest property price growth of any nation or region in the UK, rising by +9.8% on an annual basis in August. The average price of a property in Northern Ireland is now £201,043.
House prices in Wales also recorded strong growth, up +5.5%, compared to the previous year, with properties now costing an average of £224,433.
Scotland saw a more modest rise in house prices, where a typical property now costs £205,144, +1.7% more than the year before.
The North West once again recorded the strongest house price growth of any region in England, up by +4.0% over the last year, to sit at £232,917. London continues to have the most expensive property prices in the UK, now averaging £536,056, up +1.5% compared to last year. Amanda Bryden, Head of Mortgages, Halifax, said:
“House prices increased by +0.3% in August, following a rise of +0.9% in July, with the typical property now costing £292,505. Annual growth has risen to +4.3%, the strongest rate since November 2022, but this is due in large part to the comparison with weaker growth this time last year.
Such has been the resilience of house prices that the average property is now just £1,000 shy of the record high set in June 2022 (£293,507). While this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs.
However with market activity picking up and the possibility of further interest rate reductions to come, we expect house prices to continue their modest growth through the remainder of this year.”
Nathan Emerson CEO at Propertymark said that it is always “encouraging” to see enhanced levels of consumer confidence within the housing market. He continued:
“…and we now appear to be firmly following a positive trend of growth once again. It is reassuring to witness the market moving forward from what has been a very fluid few years, where household affordability has been at near breaking point for many people. As the benefits of lower inflation and interest rates fully start to bed in, Propertymark is confident there will be further market growth as the year plays out. We are, however, keen to see the UK Government’s housebuilding programme spring into action to help alleviate the ongoing mismatch between supply and demand, as it is essential to keep pace with an ever-growing population.”
Anthony Coding, RBC Capital Markets, said:
“House prices leapt by 4.3% in the year to August 2024 according to the Halifax, the highest rate of annual house price inflation since November 2022, as easing mortgage rates are boosting homebuyer confidence. We expect this positive momentum to continue for the remainder of 2024 and to see a robust autumn selling season as mortgage rates to continue to fall.”
Iain McKenzie, CEO of The Guild of Property Professionals, commented:
“Recent data has sent mixed messages about the state of the UK’s housing market, but today’s figures suggest we’re heading for an awesome autumn. Market activity has been quietly picking up over the summer, and economic indicators are starting to point in the right direction.
Headline inflation seems to be holding steady just over the 2% target by the Bank of England. It is worth noting that affordability concerns remain, as not all households are seeing living costs come down.
It will be interesting to see how high-street banks react to interest rates creeping down. They are guilty of being cautious when it comes to passing immediate changes onto the consumer, so it may be a while until we see lower borrowing costs and more mortgage offers return to the market.
A structural undersupply of housing remains in many parts of the UK, which continues to provide some support for prices. The new government’s priority of building new homes would increase supply, but would not have any sudden impact on driving prices down.
“Many buyers see the autumn months as the time to make a move, with families in particular keen to be in their new home for Christmas. We expect to see house prices rise between now and the end of the year.”