Annual house price growth has been positive since the start of the year, according to Halifax’s House Price Index, but the highest annual house price growth so far this year was 2.4% in July.
House prices stood at 0.3% month-on-month in August, which compares to a 0.9% rise in July.
The average house price stood at £292,505, a rise from £291,585 in July, and this is the highest since this time last year.
Amanda Bryden, head of mortgages at Halifax, said that the annual house price growth is “due in large part to the comparison with weaker growth this time last year”.
She continued: “Recent price rises build on a largely positive summer for the UK housing market. Prospective homebuyers are feeling more confident thanks to easing interest rates. That optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years.
“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.”
Northern Ireland reports highest annual house price growth
Northern Ireland recorded the strongest property price growth in the UK of 9.8% on an annual basis in August. The average property price came to £201,043.
House prices in Wales had an annual growth of 5.5% and properties cost an average of £224,433. Scotland’s house prices rose by 1.7% year-on-year, and the typical property price in Scotland was £205,144.
The North West had the strongest house price growth of any region in England, with house prices going up by 4% over the year to sit at £232,917.
London’s house prices rose by 1.5% year-on-year, and the capital had the most expensive properties, priced at £536,056 on average.
Mortgage rates will fall but pace to be determined
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the mortgage environment “remains volatile” as lenders were “pulling deals and repricing at short notice”.
“However, unlike a few months ago, the difference now is that mortgage rates are falling rather than rising, which is good news for affordability. Mortgage rates are at their lowest levels since March, with lenders continuing to reduce rates even though swaps have plateaued.
“The biggest lenders are keen to attract new business, which is why we are seeing this frequent repricing downwards. Five-year fixes have now dipped below 3.8%, initially for purchases and now for remortgages too. Furthermore, we are starting to see shorter-term products, such as three-year fixes, also edge below 4%,” he added.
Harris continued: “How quickly or how far pricing will continue to fall by is a little more open to debate. For a significant period of time, the ‘normal’ rate environment has been between 1.5% and 2.5%. However, borrowers coming off such products will find they are moving onto higher rates, although these are not as expensive as they would have been three months ago.
“As rates have fallen, we have seen activity noticeably increase. Estate agents report that August was busy as motivated movers who may have delayed for a while have got on with their transactions, while we have seen people take advantage of more palatable rates.”
Maeve Ward, head of intermediary sales at Together, said that the housing market “continued to improve in August” and “buyer and seller confidence continues to remain strong – even throughout the peak holiday season”.
She said: “With the Bank of England recently announcing its first rate reduction since 2021 and the next announcement due in a fortnight, we should see a continuation of rates among high street lenders falling, albeit at a slower pace than before until the next mini Budget.
“Indeed, to re-energise any meaningful economic growth, it’s very likely Labour will be looking for higher levels of public investment to bring about increased private investment in the economy and use the looming budget to make this clear. This will hopefully include more funding into housebuilding, which should positively impact the market.”
Ward said that while it was “encouraging” that the market had continued to improve, “rate cuts may take longer to fall than initially predicted, so those eager to move forward with their plans may want to explore the range of financial products and schemes available”.
“First-time buyers can look at taking advantage of shared ownership, and for those looking for fast and flexible finance to jump on an opportunity, there is the option of bridging loans. Speaking to a professional mortgage adviser is a great way to assess all the options available before making a final decision,” she noted.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Annual house price growth reaches highest point since November at 4.3% – Halifax
