Will this momentum carry over to next year?
UK house prices rose by 0.2% in October, reaching a record average of £293,999, according to mortgage lender Halifax.
The latest increase in house prices brings annual price growth to 3.9%, slightly down from September’s rate, but still enough to push the average property value past the previous peak of £293,507, set in June 2022.
“That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place,” said Amanda Bryden, head of mortgages at Halifax.
While house price growth has slowed significantly compared to the 21% surge seen between January 2020 and mid-2022, prices have mostly stabilised over the past two and a half years, with only a modest 0.2% gain in that period.
Despite higher interest rates, housing market activity has picked up, with the number of new mortgage approvals reaching a two-year high recently. This uptick coincides with average mortgage rates falling by over 160 basis points since the summer, aided by steady income growth.
“The Bank of England rate reduction in August boosted buyer confidence, leading to an uptick in applicant registrations, viewings, and offers, contributing positively to our fourth quarter revenue,” said Amy Reynolds, head of sales at Richmond estate agency Antony Roberts. “A further rate drop today would likely encourage more vendors to sell and buy, encouraging people off the fence.
“With the Budget behind us, we now have greater certainty. We are cautiously optimistic but concerned about the future stamp duty rate change for first-time buyers. If the Bank does cut rates today and the mortgage market reacts positively, first-time buyers should seriously consider making their move to agree a purchase before Christmas, as delays could prove costly.”
For Guy Gittins, chief executive of London estate agency Foxtons, a fourth consecutive month of positive growth in house prices demonstrates the current strength of the UK property market and now that the dust has settled on last week’s Autumn Budget, the outlook continues to be very positive.
“While homebuyers were understandably disappointed about the lack of a stamp duty relief extension last week, the vast majority have already factored this increased cost into their plans for 2025 and those currently looking to purchase still have time to complete before the deadline at the end of March next year,” he said.
“We can expect the heightened level of market activity seen this year to continue, with momentum strengthening as we head into 2025, further elevated by forecast interest rate reductions, the first of which could be seen as soon as today.”
Bryden pointed out that while house prices are expected to keep rising, the increase will likely be modest for the rest of this year and into the next.
“Looking ahead, borrowing constraints remain a challenge for many buyers,” Bryden said. “Following the Budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer.
“New policies like higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers might also affect demand.”
House prices by nations and regions
According to the latest Halifax House Price Index, Northern Ireland remains the UK’s fastest growing property market, with prices rising 10.2% year-on-year in October to an average of £204,242.
In Wales, house prices increased by 5.6% compared to last year, bringing the average property cost to £225,543; while Scotland saw a more modest annual price rise of 1.9%, with the average property now priced at £206,480.
In England, the North West recorded the strongest growth, with house prices up 5.9% over the past year to an average of £235,587. London continues to be the most expensive region in the UK, with an average property price of £543,308, up 3.5% from the previous year.
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