House prices growth at near two-year high
In September, UK house prices saw a notable increase of 3.2% compared to the same month last year, marking the fastest growth rate in nearly two years, according to data from Nationwide. This annual growth rate, the highest since November 2022, has been significantly driven by a rise in prices for terraced homes.
Nationwide attributes this upward trend in property values to rising incomes and recent cuts in mortgage rates, which have enhanced affordability for prospective buyers. Supporting this observation, data from the Bank of England indicated that mortgage approvals reached their highest level in two years, signaling a renewed interest in home buying.
The average house prices across the UK in September was reported at £266,094. Nationwide’s findings also revealed a monthly price increase of 0.7% from August, which had seen a slight decline.
Robert Gardner, Nationwide’s chief economist, commented on the market conditions, stating, “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.” However, he noted that despite the uptick in market activity and prices, overall performance remains subdued when compared to historical standards.
Amy Reynolds, head of sales at estate agency Antony Roberts, added a cautionary note regarding pricing strategies for sellers. “While sellers may be encouraged by these price rises, if a property is priced too high, potential buyers often won’t bother to schedule viewings. If a property isn’t attracting interest, it’s likely due to its price, and we advise sellers to adjust their prices to align with current market levels.”
The housing market is also witnessing increased competition among lenders. Brokers report that financial institutions have been offering attractive deals primarily to new homebuyers, rather than those seeking to remortgage. Notably, Nationwide has introduced a mortgage option for new borrowers, allowing them to request up to six times their total income with a minimum deposit of just 5%, though this is available only for five or ten-year fixed-rate mortgages.
Despite these positive developments, potential first-time buyers still face significant barriers, particularly concerning the costs associated with mortgage deposits and monthly repayments. As the market evolves, affordability remains a crucial factor for many looking to enter homeownership.
