UK house prices hit two-year high, Halifax reveals – what it means for you
HOUSE prices are on the rise in regions across the UK amid a “promising summer”.
The average UK house price hit a two-year high in August, up 0.3% on the previous month, according to new data from Halifax.
The major lender said the typical property now costs £292,505 – up from £291,268 in July when they rose by 0.9%.
But year-on-year prices are up 4.3%, Halifax added, the strongest rate since November 2022.
But it’s a mixed picture across the UK, with most regions only seeing a fairly moderate increase in house prices.
Northern Ireland continues to have the strongest property price growth of any nation or region in the UK, rising by 9.8% on an annual basis in August.
This means the average price of a property in Northern Ireland is now £201,043.
House prices in Wales also recorded strong growth, up 5.5%, compared to the previous year, with properties now costing an average of £224,433.
Scotland saw a more modest rise in house prices, where a typical property now costs £205,144, 1.7% more than the year before.
In England, the steepest rate of house price inflation can be found in the North West, up by 4% over the last year, now standing at £232,917.
Unsurprisingly, London continues to have the most expensive property prices in the UK, now averaging £536,056, up 1.5% compared to last year.
Amanda Bryden, head of mortgages at Halifax, said: “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.”
The average property is just £1,000 short of the record price set in Halifax’s house price index of £293,507 in June 2022.
Ms Bryden continued: “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.”
It comes after the Bank of England voted to cut the base interest rate by a quarter point at the start of August to 5%, which some experts said has given buyers more confidence.
Several major lenders have been engaged in a rate war since the cut too.
Santander is the latest to announce reductions. From tomorrow the lender will be reducing several fixed-rate deals for both new and existing borrowers, by as much as 0.32 percentage points.
Earlier this week HSBC, Barclays and NatWest cut mortgage rates, sending them back to levels not seen since Liz Truss became Prime Minister in September 2022.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the mortgage market “remains volatile”.
He added: “However, unlike a few months ago, the difference now is that mortgage rates are falling rather than rising, which is good news for affordability.”
What it means for you
The average property is just £1,000 short of the record price set in Halifax’s house price index of £293,507 in June 2022.
Ms Bryden continued: “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.”
While Alice Haine, personal finance analyst, at Bestinvest, says the uplift in buyers has given the market a “confidence boost” – which is good news for both buyers and sellers.
She said: “An uplift in the number of buyers in the market, whose affordability position has improved thanks to the combined effects of easing inflation, robust wage growth and the 25-basis point
interest rate cut at the start of last month, which has helped to reduce mortgage rates, has delivered a confidence boost to the market.
“Strong demand for properties is being matched by a surge in listings as sellers, previously sitting on the sidelines as they waited for market conditions to improve, are now making a move.”
What’s next for property prices
Ms Haine also said that providing the economy continues its recovery, following robust growth recorded in the first six months of the year and inflation falling to around 2%, housing market activity is expected to keep strengthening in line with easing affordability
levels.
She said: “That’s not to say that an expected uplift in inflation in the final few months of the year on the back of rising energy prices or a potential slowdown in the pace of interest rate cuts won’t create a few stumbling blocks along the way.
“With the housing market generally in better shape than it was a little over a year ago when mortgage rates were still alarmingly high, all eyes will be pinned on the next interest rate decision later this month.”
The BoE will be making its next base rate decision on September 19.
While another UK rate reduction is expected before the year is out – though potentially not as early as this month – something that would
improve mortgage rates for new borrowers and those on trackers, it won’t ease the concerns of those locked into fixed-rate deals with some time left to run, Ms Haine pointed out.
She said: “Any increase in rates, whether immediate or set for a later date, has the potential to dampen property prices.
“Higher mortgage rates, a significantly tighter regulatory environment and a raft of unfavourable tax changes in recent years have already encouraged many buy-to-let landlords and second homeowners to sell up.”
A possible Capital Gains Tax (CGT) rate change in October’s Budget could be the “final nail in the coffin” for the sector, according to Ms Haine, as investors “seek refuge” in other assets subject to more favourable tax treatment than bricks and mortar.
If Rachel Reeves does push ahead with a dramatic shift in CGT rates, a selling frenzy could ensue if homeowners rush to sell before any new rules come into force.
What has been happening with house prices?
The housing market has been pretty stagnant throughout the first half of this year, but there are signs that growth is picking up.
In July the average price stood at £291,268, up from £288,455 in June.
Karen Noye, mortgage expert at Quilter said: “A dip in activity is usually to be expected in the summer months, but this year it appears to be minimal, and we are instead seeing signs of an ongoing recovery in the housing market.
“Though the report from Halifax is somewhat at odds with others such as Nationwide which reported a fall in prices in August, there remains a general consensus that growth, at least on an annual basis, is picking up speed.”
Who else tracks house prices?
Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It’s one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, cash buyers are not included.
Rightmove and Zoopla also publish monthly house price data.
The former is based on asking prices from the property listings on its website.
The latter uses sold prices, mortgage valuations and data on agreed sales.
Neither takes into account the price a property actually sold for like the ONS Land Registry, which could end up being higher or lower and some might not even sell at all.
Here’s the latest data from other indices:
- Nationwide – house prices fell 0.2% in August, and increased 2.4% annually, with the average property now at £265,375
- ONS – house prices increased by 1.2% in May and 2.2% annually, with the average property now at £281,000.
- Rightmove – house prices fell 0.4% in July, and increased 0.4% annually, with the average new seller asking price now at £373,493.
- Zoopla – house prices increased 0.1% in July, and by the same annually, with the average house price now £265,600.
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