London (Parliament Politics Magazine) – UK house prices are rising at their fastest annual rate for nearly two years as borrowing prices continue to fall on expectations that the Bank of England will keep cutting interest rates, Nationwide has stated.
The building society expressed prices grew by 3.2% in September compared with the same month last year, well beyond the 2.4% annual growth registered in August, and the fastest pace since the 4.4% registered in November 2022. The average house cost across the UK was £266,094 in September – a 0.7% month-on-month growth in August and only 2% below the all-time high costs recorded in the summer of 2022.
How have borrowing costs influenced the housing market?
Robert Gardner, Nationwide’s chief economist, stated: “Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”
how have lenders adjusted their mortgage offerings recently?
Lenders have been lowering their rates on new mortgage deals in recent months on the prospect of additional cuts to the cost of borrowing after the Bank of England lowered its base rate from 5.25% to 5% in August, its first cut since March 2020.
In its last inspection, the BoE held rates at 5% and stated that while interest rates were on the path down, it needed more proof that they would remain low before further cuts. Lenders such as Nationwide, Halifax and HSBC are now presenting five-year fixed rates at below 4% for buyers for the first time since the start of the year.
Banks have also begun lending more to borrowers in the last month, with Nationwide
announcing last week it would begin to offer first-time buyers loans at six times their annual household income. Lloyds and Halifax have recently increased their borrowing limitations to 5.5 times household incomes.
What is the significance of the growth in the north?
The Nationwide figures, which also documented performance over the third quarter of the year, showed that the growth in house prices in the north of England over that period outpaces those in the south.
The average house cost across the three months to September 2024 increased by 3.1% in the north of England year-on-year, compared with 1.3% in the south. Northern Ireland registered the biggest growth across the period, with an 8.6% increase in house prices, while Scotland experienced a 4.3% increase. Wales registered a 2.5% rise. Terrace houses continued to offer the biggest annual increases in prices, with the average price up by 3.5% in September. The average price for a flat expanded by 2.7%.