"That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place"
- Amanda Bryden - Halifax
This morning's data released by Halifax has shown that Average house prices increased by +0.2% in October, a fourth consecutive monthly increase.
Year-on-year prices are up +3.9%, easing from +4.6% in September
According to Halifax, the price of a typical property now costs £293,999, surpassing the previous peak set in June 2022 (£293,507)
National and regional breakdown
Northern Ireland continues to record the strongest property price growth of any nation or region in the UK, rising by +10.2% on an annual basis in October. The average price of a property in Northern Ireland is now £204,242.
So too did house prices in Wales which were up +5.6%, compared to the previous year. The price of a typical home in Wales now stands at £225,543.
In Scotland, there was a more modest increase in house prices. The 1.9% year-on-year rise there sees average house prices now stand at £206,480.
The North West remains the region of England with the strongest growth, up by +5.9% over the last year, with average homes costing £235,587.
And as usual, the London market continues to have the most expensive property prices in the UK, now averaging £543,308 - following a 3.5% rise in prices against last year.
Amanda Bryden, Head of Mortgages, Halifax, said: “Average UK house prices nudged up +0.2% in October, continuing the positive momentum of recent months. This brought the annual growth rate to +3.9%, slightly lower than in September. The average property price has reached a record high of £293,999, surpassing the previous peak of £293,507 set in June 2022, towards the end of the pandemic-era ‘race for space’.
“That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place.
"Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years, recording a +0.2% increase overall. That’s a significant slowdown compared to the +21% rise we saw in the equivalent period from January 2020 to the summer of 2022.
Improving conditions
“Despite the affordability challenge, market activity has been improving. The number of new mortgages agreed recently reached its highest level in two years. This aligns with average mortgage rates dropping steadily since spring - now over 160 basis points lower than in summer 2023 – coupled with continued positive income growth.
“Looking ahead, borrowing constraints remain a challenge for many buyers. Following the budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer. New policies like higher stamp duty for second-home buyers and a return to previous thresholds for first-time buyers might also affect demand.
“While we expect house prices to keep growing, it will likely be at a modest pace for the rest of this year and into next.”
Tom Bill, head of UK residential research at Knight Frank commented: “The interest rate landscape has become more adverse than a fortnight ago, which will increase downward pressure on house prices in the short term.
"The Budget signalled higher levels of public borrowing and swap rates have jumped since the start of last month. The impact of a Trump presidency on UK interest rates is harder to predict. While the new President’s economic plans may prove inflationary, the UK’s appeal among investors could grow, potentially putting downward pressure on rates in the longer term.
"For now, anyone deciding whether to fix for two or five years must consider whether they think Labour’s revenue-raising plans will work or more rate turbulence lies ahead during this Parliament."
Nathan Emerson, CEO of Propertymark said: “Following the recent Budget there is potential the housing market may see an increased momentum across the winter months, as buyers potentially look to make their move ahead of proposed Stamp Duty increases from 1 April 2025.
"Increases will impact buyers across England and Northern Ireland, with some seeing Stamp Duty costs typically increase by around £2,500. However, it remains important to view the wider picture and that continued house price growth, even in the short to medium term, will help offset such tax expenditures for the highest percentage of those looking to purchase after the threshold change date.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: "The Bank of England rate reduction in August boosted buyer confidence, leading to an uptick in applicant registrations, viewings, and offers, contributing positively to our fourth quarter revenue. A further rate drop today would likely encourage more vendors to sell and buy, encouraging people off the fence.
“With the Budget behind us, we now have greater certainty. We are cautiously optimistic but concerned about the future stamp duty rate change for first-time buyers. Do they realise how long it takes to complete a purchase? If the Bank does cut rates today and the mortgage market reacts positively, first-time buyers should seriously consider making their move to agree on a purchase before Christmas, as delays could prove costly.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The housing market has been significantly buoyed by lower mortgage rates, leading to more interest from prospective buyers and increased activity.
“Since UK gilt yields rose in the immediate aftermath of the Budget, this has affected Swap rates which underpin the pricing of mortgages, providing an indicator as to where interest rates will be. Except for a few lenders who purchased Swaps before the Budget, mortgage pricing has edged upwards.
“The Bank of England is still expected to cut interest rates later today which would help boost confidence and affordability, particularly as this trend is expected to continue, albeit at a slower pace than previously thought, into the new year."
