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UK house prices grow at fastest pace in two years, Nationwide says
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UK house prices have grown at their fastest rate in the past two years, according to Nationwide.
The building society says the average price of a property increased by 0.7% in September.
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This means that the annual price growth rate accelerated from 2.4% in August to 3.2% this month.
This is the fastest pace since November 2022 when there was a 4.4% rise.
The average UK house price in September is £266,094, which is an increase from £265,375 in August.
The news follows a pretty subdued period for the property market, with wider economic factors like wage stagnation and political uncertainty hitting the market hard.
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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 be the most strongly for annual growth in the third quarter of the year, with prices up by 8.6% year-on-year, Nationwide said.
This means the average price of a property in Northern Ireland is now £196,197.
While East Anglia was the weakest performing region, with prices down by 0.8% over the year - with prices standing at £270,906.
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Scotland saw a decent acceleration in annual growth to 4.3%, up from 1.4% in the second quarter.
Wales saw a more modest year-on-year rise from 1.4% in the previous quarter to 2.5%.
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Overall, across England, prices were up 1.9% compared with the third quarter of 2023.
Northern England - which comprises North, North West, Yorkshire and the Humber, the East Midlands and West Midlands - continued to outperform the south, with prices up 3.1% year-on-year.
Nationwide found that the North West was the best-performing English region, with prices up 5% year-on-year.
Southern England - made up of the South West, Outer South East, Outer Metropolitan, London and East Anglia regions - saw a 1.3% increase compared to last year.
While, unsurprisingly, London remained the best-performing southern region with annual price growth of 2%.
Here are the average prices in the three months to September and their annual change, according to Nationwide:
- Northern Ireland - £196,197, 8.6%
- North West- £215,807, 5.0%
- Scotland - £184,471, 4.3%
- Yorkshire and the Humber - £206,493, 4.3%
- North East - £161,066, 3.2%
- Wales - £207,113, 2.5%
- London - £524,685, 2.0%
- Outer Metropolitan - £424,345, 1.9%
- East Midlands - £232,390, 1.8%
- West Midlands - £243,599, 1.0%
- South West - £303,522, 0.6%
- Outer South East - £336,253, 0.6%
- East Anglia - £270,906, minus 0.8%
Robert Gardner, Nationwide’s chief economist, said: “Average prices are now around 2% below the all-time highs recorded in summer 2022.
“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.”
What it means for you
The figures published today show that the housing market is proving pretty resilient.
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “These aren’t runaway price rises, but they’re firmly positive, which always helps boost buyer sentiment and keep the wheels rolling on the property bandwagon.”
The Bank of England (BoE) cut the base rate from 5.25% to 5% in August, before holding them at this rate again in September.
Holly Tomlinson, a financial planner at wealth manager Quilter said: “The Bank of England’s recent move to hold the base rate steady, while not transformative to mortgage rates, does continue to provide stability to the market and will continue to help more competitive mortgage deals re-enter the market.
“Lenders are competing to attract custom, and a more stable environment is likely to mean they go further with rate cuts.”
As a result of the recent reduction, lenders have already started to follow suit and drop their fixed rates to below 4%.
In fact, Nationwide is leading the way, currently offering a 3.74% home purchase plan deal.
The move also comes as Barclays announced a reduction in rates by as much as 0.34% for new buyers and those remortgaging.
However, some experts say we're not "out of the woods yet".
Verona Frankish, chief executive of Yopa said: “The base rate still remains significantly higher than we’ve seen in recent years and whilst buyers are returning with confidence, we’re not quite out of the woods yet with respect to transactional volumes, which still remain someway off the previous pace.”
The next BoE base rate review is scheduled for Thursday, November 7.
While Alice Haine, personal finance analyst, at Bestinvest, says movers are feeling slightly more upbeat about being able to secure the home they want
But she said: "Market conditions may be improving enough to boost sentiment with buyer numbers up, along with the number of sales agreed and properties listed, but that won’t entirely cancel out the affordability concerns as we head into the final quarter.
“Mortgage rates are still relatively high when compared to the period prior to late 2022 when borrowing costs accelerated at a rapid pace."
However, rents are also high, she explained, so the attraction of buying a home remains for first-time buyers hoping to secure cheaper monthly housing costs.
What's next for property prices
Matt Thompson, head of sales at estate agent Chestertons, said that it expects September’s level of market activity to continue in October.
But, the effect of the Autumn Statement, which is coming at the end of the month, still remains to be seen.
Mr Thompson said: "Sellers will review their position following the autumn Budget whilst some buyers await the next Bank of England announcement on interest rates in November.”
It comes after new mortgage approvals in August came in at 64,858 up 3.8% on July posting their highest level since September 2022.
Anthony Codling, MD at RBC Capital Markets, said: "The impact of the so called 'mini-budget' was far from 'mini' and homebuyers and housing market investors will be hoping that Labour's first budget in October will not upset the current housing market recovery.
"We expect mortgage rates to fall further in the coming months and with wages continuing to rise the outlook for the UK housing market remains on the up and with housing so high on the political agenda it would be a shock if the Budget stopped the recovery in its tracks."
Others feel optimistic that the increase in house prices will carry on throughout the remainder of the year.
House prices usually remain robust at this time of the year, as there is still time to buy, complete and move in before Christmas, Iain McKenzie, chief executive of the Guild of Property Professionals pointed out.
While Guy Gittins, chief executive of estate agent Foxtons said: “We’re already seeing more inquiries made, more offers submitted and more sales agreed, all of which bodes very well for the remainder of the year and beyond.”
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 August, Nationwide found the average house price stood at £265,375.
On a monthly basis house prices actually fell by 0.2% in August, with around £959 wiped off the value of a home compared to July.
However, this tends to happen during the warmer months as factors such as the summer holidays tend to slow down action in the market.
Karen Noye, mortgage expert at Quilter previously 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."
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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.
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Here's the latest data from other indices:
- Rightmove (September 2024) +0.8% monthly, +1.2% annually
- Zoopla (August 2024) +0.3% monthly, +0.5% annually
- Halifax (August 2024) +0.3% monthly, +4.3% annually
- ONS Land Registry (July 2024) +2.2% monthly, +2.2% annually
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