Market conditions have “steadily improved” over the summer and into early autumn and mortgage affordability has been easing due to strong wage growth and falling interest rates, according to the Halifax House Price Index.
This has also boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.
According to the Index, the average amount paid by first-time buyers has increased by +4.2% over the past year, which equates to an extra £9,409 in cash terms. This brings the typical first-time buyer property price up to £232,769, its highest level since May 2024.
However that’s still about £1,000 less than the average amount paid by a first-time buyer two years ago (£233,760), a decrease of around -0.4%. Amanda Bryden, Head of Mortgages, Halifax, said:
“UK house prices climbed for the third month in a row in September, with a slight increase of +0.3%, or £859 in cash terms. Annual growth edged up to +4.7%, the highest rate since November 2022. This brings the average property price up to £293,399, just shy of the record high of £293,507 set in June 2022.
It’s essential to view these recent gains in context. While the typical property value has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months. Looking back two years, prices have increased by just +0.4% (£1,202).
While improved mortgage affordability should continue to support buyer activity – boosted by anticipated further cuts to interest rates – housing costs remain a challenge for many. As a result we expect property price growth over the rest of this year and into next to remain modest.”
Nations and regions house prices Northern Ireland continues to record the strongest property price growth of any nation or region in the UK, rising by +9.7% on an annual basis in September. The average price of a property in Northern Ireland is now £203,593.
House prices in Wales also recorded strong growth, up +4.4%, compared to the previous year, with properties now costing an average of £224,119. Scotland saw a more modest rise in house prices, where a typical property now costs £205,718, +2.1% more than the year before.
The North West once again recorded the strongest house price growth of any region in England, up by +5.1% over the last year, to sit at £234,355.
London continues to have the most expensive property prices in the UK, now averaging £539,238, up +2.6% compared to last year. This is still some way below the capital’s peak property price of £552,592 set in August 2022. Nathan Emerson CEO at Propertymark said:
“It is very welcome news to see yet further growth in the housing market and taking a wide-angle view of the year, there is no doubt consumers are now able to approach the buying and selling process with a far greater degree of confidence compared to the very start of the year. There is still further progress to be made, but with strong hints we may see further dips in the base rate before the year is out, we are seeing some lenders already confident enough to switch up their mortgage offerings which is proving very welcome news for borrows.”
HMRC monthly property transaction data shows UK home sales decreased in August 2024 compared to the previous month. UK seasonally adjusted (SA) residential transactions in August 2024 totalled 90,210 – down by – 0.4% from July’s figure of 90,610 (up +7.6% on a non-SA basis). Quarterly SA transactions (June 2024 – August 2024) were approximately +1.6% higher than the preceding three months (March 2023 – May 2024).
What’s more, year-on-year SA transactions were +5.4% higher than August 2023 (+10.3% higher on a non-SA basis). Latest Bank of England figures show the number of mortgages approved to finance house purchases increased in August 2024, by +3.8% to 64,858. Year-on-year the figure was +43.4% above August 2023.
The RICS Residential Market Survey results for August 2024 show an improvement in sales market activity. New buyer enquiries has a net reading of +15%, up from +4%, with agreed sales up to +6%, from -1%. New instructions have also improved with a net reading of +7%, up from +3%. Iain McKenzie, CEO of The Guild of Property Professionals, commented:
“The difference between the market in 2022 and now is that interest rates are much higher, making it more difficult for buyers to keep up with mortgage payments or get a mortgage in the first place. Any measures introduced in the Autumn Budget to maintain stability in house price growth, while helping get more people on the property ladder would be welcomed by the industry at large.
Estate agents are still reporting healthy levels of footfall coming through the door, with demand for quality housing still high.”