UK house prices record highest annual growth rate since 2022 | house price

UK house prices are rising at the fastest annual rate in almost two years as borrowing costs continue to fall on expectations that the Bank of England will continue to cut interest rates, Nationwide has revealed.

The housing association said prices rose 3.2% in September compared to the same month last year, well above the 2.4% annual growth recorded in August and the fastest pace since recording 4.4% in November 2022.

The average house price across the UK in September was 266,094, up 0.7% in August on the previous month and 2% below the record high price recorded in summer 2022.

Robert Gardner, chief economist at Nationwides, said: “In recent months, income growth has continued to outpace house price growth and borrowing costs have fallen slightly on expectations that the Bank of England will continue to cut interest rates in the coming quarters.” .

These trends have helped improve affordability for prospective buyers and have helped drive modest increases in activity and home prices, although both remain low by historical standards.

Separate figures from the bank showed monthly mortgage approvals rose from 62,500 in July to 64,900 in August. This reflects increased housing market activity as borrowing costs fall and real wage growth remains resilient.

Net mortgage loans amounted to 2.9 billion, an increase of approximately 100 million from the previous month.

Borrowing on consumer credit rose to 1.3 billion from 1.2 billion, which economists said reflected the strength of household finances. [This] Ashley Webb, UK economist at consultancy Capital Economics, said this was consistent with our view that consumer spending growth would strengthen over the coming quarters.

According to Statistics Korea, the household savings rate, which represents the proportion of disposable income that is not spent on consumption, increased from 8.9% in the first three months of this year to 10% in the second quarter.

But it warned that the UK economy grew less between April and June than previously estimated. Gross domestic product (GDP) rose 0.5% from an earlier estimate of 0.6% after output in the manufacturing and construction sectors fell more than initially thought.

Mortgage lenders have been cutting interest rates on new deals in recent months on the prospect of further cuts in borrowing costs after the Bank of England cut its benchmark interest rate from 5.25% to 5% in August. This is the first reduction since March 2020.

Despite keeping rates unchanged at its most recent policy meeting earlier this month, the bank signaled that borrowing costs are gradually falling from their highest levels since the 2008 financial crisis.

Lenders such as Nationwide, Halifax and HSBC are offering five-year fixed rates below 4% to buyers for the first time since the start of the year.

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Banks also began lending more to borrowers last month, with Nationwide last week announcing it would begin offering loans worth up to six times annual household income to first-time buyers. Lloyds and Halifax recently increased lending limits to 5.5 times household income.

Nationwide figures, which also recorded results for the third quarter of this year, show that house price growth in the North of England was higher than in the South during that period.

In the three months to September 2024, average house prices rose 3.1% in the North of England, while they rose 1.3% in the South.

Northern Ireland recorded the biggest rise in house prices over the period, rising 8.6%, while Scotland recorded a 4.3% increase. Wales recorded a rise of 2.5%.

Terrace houses had the largest annual average price increase, with the average price rising 3.5% in September. The average price of apartments rose 2.7%.

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