UK house prices hit two-year high

UK house prices edged up for the second consecutive month in August, reaching their highest level in two years, according to Halifax.

Its index reveals that prices rose by 0.3% compared to July, following a 0.9% increase the previous month.

The year-on-year growth in house prices now stands at 4.3%, the strongest rate since November 2022.

The average property value in the UK has reached £292,505, surpassing the previous peak of £291,585 recorded in August 2022.

Northern Ireland continues to lead the UK in terms of annual house price growth.

‘Largely positive summer’

Amanda Bryden, the 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.”

She adds that ‘affordability remains a significant challenge’ but with market activity picking up, and the prospect of more rate cuts, house prices should continue their ‘modest growth’.

Reaction to the Halifax house price rise news

Reaction from the property sector to the house price rise news from Halifax was mixed.

Karen Noye, a 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 to 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.”

The chief executive of Yopa, Verona Frankish, said: “The property market really picked up the pace in August with respect to the annual rate of house price growth seen and there’s no doubt that this improving market sentiment has been spurred by the first cut to interest rates since 2020. Buyers are proceeding with a renewed level of confidence and with further interest rate cuts expected before the year is out, we anticipate that market activity and house prices will continue to improve over the coming months.”

Director of Benham and Reeves, Marc von Grundherr, said: “House prices continue to climb on both a monthly and annual basis and so far, it’s been a very solid summer for the UK property market, with both buyer and seller activity levels continuing to improve. The monthly rate of house price growth did slow in August, but this was only to be expected given that it’s summer holiday season and the real proof in the pudding is the annual rate of growth, which was the strongest seen since the back end of 2022.”

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “There are still some headwinds to navigate. The fact that prices are so high will mean some people are simply priced out of the market. This is particularly the case while mortgage rates remain higher than we’ve seen for years. We’re not expecting any immediate dramatic movements from the Bank of England, so this could endure for months to come. There’s also likely to be a slackening in demand from buy to let investors, who may take fright over Budget-related speculation that capital gains tax could be set to rise.”

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