Asking prices for UK homes reach two-year high

August saw UK house prices hit a two-year high, according to Halifax. The largest mortgage lender in the UK has also noted increased buyer confidence since the recent interest rate cut.  

Reporting that the average UK property now stands at just over £292.5k, the lender says August prices were up 4.3% year on year.¹

The rise in prices and fall in interest rates

Halifax’s figures, which only reflect buyers with mortgages, show average property prices of £292,505; this is “just shy” of those reported in June 2022 when they reached a record £293,507.¹

The increase is thought to be attributable to the Bank of England reducing interest rates, for the first time in four years, in August.  

The member-owned lender, Nationwide, has also confirmed August saw property prices rise, though stating by 2.4% in the year to August 2024.¹

What the news means for homeowners and buyers

Amanda Bryden, head of mortgages for Halifax said of the findings: “While this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs.”¹

It is certainly worth bearing in mind that although the cut is encouraging, they remain at 5%, the highest they’ve been since 2008 when the economy was facing a major crisis.¹

Hargreaves Lansdown’s head of personal finance, Sarah Coles, stated that there “wasn’t a seismic shift” even though deals had improved following the interest rate cut, with the average two-year fixed rate mortgage reducing from 5.77% to 5.54%¹

Market predictions

If predictions are right, the news continues to be somewhat encouraging. The Bank of England is expected to cut interest rates again, though it is not known when.

Ms Bryden added: “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.”¹

For some indication as to the rate of growth, Halifax reports that house prices increased by 0.9% in July and 0.3% in August.¹

The mortgage lender, owned by Lloyds Banking Group, and a division of Bank of Scotland plc, says the growth was largely down to how weak prices were last year, as opposed to how strong they are now.  

These figures will be of particular interest to first-time buyers who won’t want prices to rise too quickly.

Which parts of the UK are most affected by the rise?

In Northern Ireland, growth continues to be strong. August saw an increase of 9.8% compared to the same time last year, making the average house price £201,043.¹

And in England, the north west saw the greatest increase, up 4% year on year, bringing the average house price to £232,917.¹

What these changes mean for you

As always, there is no crystal ball. These figures indicate that, for the moment at least, there will be a slow and steady growth in property prices.

Sources

1. https://www.bbc.co.uk/news/articles/cr4091rzy2wo

All the information in this article is correct as of the date of publishing. The opinions expressed in this publication are those of the authors Euxton Mortgage Market. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

September 2024