Nationwide has reported that UK house prices increased by 0.7% in September, after taking account of seasonal effects.
This resulted in the annual rate of growth rising from 2.4% in August to 3.2% in September, the fastest pace since November 2022 (4.4%).
Average prices are now around 2% below the all-time highs recorded in summer 2022.
Robert Gardner, Nationwide’s chief economist, said: “Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.
“Our regional house price indices are produced quarterly, with data for Q3 (the three months to September) indicating that most regions saw a pickup in annual house price growth.
“Northern Ireland remained the best performer by some margin, with prices up 8.6% compared with Q3 2023. Scotland saw a noticeable acceleration in annual growth to 4.3% (from 1.4% in Q2), while Wales saw a more modest 2.5% year-on-year rise (from 1.4% the previous quarter).
“Across England overall, prices were up 1.9% compared with Q3 2023. Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands), continued to outperform southern England, with prices up 3.1% year-on-year. The North West was the best performing English region, with prices up 5.0%.”
Holly Tomlinson, financial planner at Quilter, added: “The latest house price data from Nationwide shows that house prices saw a large 0.7% growth in September, resulting in an annual rate of 3.2% representing the fastest growth in two years. This follows a trend of moderate gains, even as the traditional summer lull typically cools activity. The latest property statistics for August 2024 highlight this resilience, with residential transactions standing at 90,210, a 5% increase from the same period last year, though down slightly compared to July.
“As economic conditions begin to stabilise, both buyers and sellers are finding that they are more compelled to get house hunting again helping to stimulate this growth in prices. The Bank of England’s recent move to hold the base rate steady, while not transformative to mortgage rates, does continue to provide stability to the market and will continue to help more competitive mortgage deals re-enter the market. Lenders are competing to attract custom, and a more stable environment is likely to mean they go further with rate cuts.
“Fixed-rate and tracker mortgage options continue to present a key decision point for many buyers. While fixed-rate deals provide much-needed certainty, particularly in these unpredictable times, they remain elevated compared to pre-pandemic levels with many people likely shocked when they come to remortgage. As a result, more people are now choosing to look at tracker mortgage deals as they bide their time before fixing later down the road, but this must be weighed against potential early repayment charges.
“The upcoming Labour budget is likely going to have a limited impact on further buoying the property market. With the government primarily focused on addressing broader fiscal challenges, including a £22 billion fiscal shortfall, significant housing stimulus seems unlikely at this stage. However, this morning’s results show that organically house prices are returning to a strong upward trajectory.”