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UK house prices recorded their fastest annual increase since 2022 as falling mortgage costs helped fuel a recovery in the property market, according to finance firm Halifax.
The latest data on Friday showed the average house price rose 4.3% year-on-year in August, the highest rate of growth since November 2022, to £292,505.
Home prices rose 0.3 percent compared to the previous month.
Both rates were slightly higher than the 4.2 percent annual growth and 0.2 percent month-on-month increase forecast by economists surveyed by Reuters.
“The recent price rise builds on a broadly strong summer for the UK housing market, with potential homebuyers feeling more confident thanks to easing interest rates,” Amanda Bryden, head of mortgages at Halifax, said.
Data published last week by finance company Nationwide showed house prices rose in August at the fastest annual pace since December 2022, while Bank of England figures showed mortgage approvals reached their highest level since former chancellor Liz Truss’s “mini” budget.
“There was a collective sigh of relief in the market when the election result ended the lingering political uncertainty and interest rates started to fall,” said Jeremy Leaf, a north London estate agent.
House prices soared during the pandemic, helped by record low borrowing costs, but were then hit when the Bank of England raised interest rates to curb inflation.
The Bank of England cut interest rates from a 16-year high of 5.25% in August, lowering mortgage rates and giving new life to the property market, and markets expect further rate cuts in November, further reducing borrowing costs next year.
“A small reduction in interest rates during what is typically one of the slowest times of the year has resulted in an immediate response from the housing market,” said Amy Reynolds, sales director at Richmond real estate agency Antony Roberts.
Halifax reported that annual price growth in Northern Ireland continued to be the highest of any country or region in the UK, reaching 9.8 per cent.
London, the most expensive property in the country, was again the worst performing, with prices now averaging £536,000, up 1.5%.
The lender said the average property price was down just £1,000 from the £293,500 recorded in June 2022. Average property prices are up 22% compared to January 2020, before the pandemic.
“While this is welcome news for existing homeowners, home buying remains a significant challenge for many potential buyers who are still adjusting to rising mortgage costs,” Mr Bryden said.
