UK house prices rise at fastest rate since November 2022, Halifax says

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UK house prices rose at the fastest annual pace since 2022, according to the lender Halifax, as lower mortgage costs helped fuel a rebound in the property market.

The average house price increased by 4.3 per cent annually in August, marking the strongest growth rate since November 2022, reaching £292,505, according to new data on Friday.

House prices were up 0.3 per cent compared with the previous month.

Both rates were marginally higher than the 4.2 per cent annual growth and a 0.2 per cent month-on-month increase forecast by economists polled by Reuters.

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.”

Data from lender Nationwide last week showed that house prices grew at the fastest annual pace since December 2022 in August, while figures from the Bank of England showed mortgage approvals rising to the highest level since former prime minister Liz Truss’s “mini” Budget.

Jeremy Leaf, north London estate agent, said: “The market breathed a collective sigh of relief when first the election result ended lingering political uncertainty and again when interest rates started to fall.”

House prices grew sharply during the pandemic, helped by record-low borrowing costs, but were then hit by the Bank of England raising interest rates to quell inflation.

The BoE cut interest rates from their 16-year high of 5.25 per cent in August, bringing mortgage rates down and injecting new life into the property market. Markets expect another rate cut in November and a further decline in borrowing costs next year.

Amy Reynolds, head of sales at Richmond estate agent Antony Roberts, said: “One small reduction in interest rates has translated into an instant response from the housing market during what is usually one of the quietest months of the year.”

Halifax reported that Northern Ireland continued to record the highest annual price growth of any nation or region in the UK, at 9.8 per cent.

London, which has the most expensive property prices in the country, now averaging £536,000, was once again the worst performer with a 1.5 per cent price rise.

The lender said the average property was now just £1,000 below the record high set in June 2022 when it reached £293,500. The average property cost was up 22 per cent from January 2020, before the pandemic.

Bryden commented that “while this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs”.