London (Parliament Politics Magazine) – UK house prices increase for the third month in a row to a near-record high.
UK house prices rose for the third month in a row in September to nearly £200 short of a record high as increasing worker pay and falling interest rates allowed make mortgages more affordable for some homebuyers, according to a leading index.
How do recent interest rate cuts impact buyers?
Data unleashed by Halifax, Britain’s biggest mortgage lender, revealed that prices climbed by 0.3% last month, extending a streak of increasing prices that began in July. The month-on-month growth matches the 0.3% rise recorded in August.
It suggests that the price tag of the typical UK home edged more increased by £859 in cash terms to £293,399 – just shy of the £293,507 peak formed in June 2022, three months before the then prime minister Liz Truss’s disastrous mini-budget. On an annual basis, prices increased 4.7%. That is slightly higher than the 4.3% registered in August, but still the highest rate of growth since November 2022.
What does the latest data reveal about market trends?
The housing market has been offered a leg-up by the Bank of England, which in August cut interest rates for the first time in four-and-a-half years from 5.25% to 5%. It has led to a revived mortgage price war among commercial lenders, which have been carving their own mortgage rates in a bid to capture a bigger share of the market after months of relatively sluggish growth.
Some, such as the Nationwide Building Society, are also increasing the borrowing cap for first-time buyers, permitting some to take on mortgages worth up to six times their wages, to attract new customers.
“Market conditions have steadily improved over the summer and into early autumn. Mortgage affordability has been easing thanks to strong wage growth and falling interest rates,” stated Amanda Bryden, the head of mortgages at Halifax. “This has boosted confidence among potential buyers, with the number of mortgages agreed up more than 40% in the last year and now at their highest level since July 2022.”
Bryden expressed it was unlikely to shift the dial for most coming homebuyers, who are still priced out of the market. She cautioned that property prices would remain suppressed into 2025. “While improved mortgage affordability should persist 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 cost growth over the rest of this year and into next to remain modest,” Bryden said.