UK House Prices Rise for Third Consecutive Month
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- 09 Oct 2024
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UK house prices continued their upward trend in September, marking the third consecutive month of increases, according to data from Halifax, the country's largest mortgage lender. Prices rose by 0.3% last month, matching the increase seen in August, bringing the average UK home price to £293,399—just £100 short of the record high set in June 2022.
The rise in house prices is attributed to a combination of factors, including rising worker pay and falling interest rates, which have made mortgages more affordable for some buyers. The Bank of England's decision in August to cut interest rates from 5.25% to 5% for the first time in over four years has spurred a mortgage price war among lenders, further enhancing affordability.
On an annual basis, house prices increased by 4.7%, slightly up from the 4.3% growth recorded in August, and the highest rate since November 2022. Some lenders, like Nationwide building society, are also raising borrowing caps for first-time buyers, allowing them to take on larger mortgages relative to their earnings.
Amanda Bryden, head of mortgages at Halifax, noted that market conditions have improved, with mortgage affordability easing due to strong wage growth and lower interest rates. This has boosted buyer confidence, with mortgage agreements up more than 40% over the past year, reaching their highest level since July 2022.
Despite these positive trends, Bryden cautioned that many prospective homebuyers remain priced out of the market, and property prices are expected to remain subdued into 2025. While improved mortgage affordability is likely to support buyer activity, housing costs continue to pose a challenge for many.
Research by estate agent Hamptons highlights the difficulties faced by young homebuyers, particularly generation Z, who are expected to pay average mortgage payments of £1,739 a month—nearly double what previous generations paid when entering the property market. This disparity is attributed to steady house price inflation and varying interest rates at the time of purchase. Millennials, for example, have been paying an average of £863 a month, while generation X and baby boomers paid £923 and £775, respectively.
