UK house prices reached a two-year high last month, signaling a recovery in the property market from the impact of Liz Truss’s controversial mini-budget that led to soaring borrowing costs, according to recent data from Halifax.
Halifax reported that the average cost of a house increased by 0.3% in August, following a 0.9% rise in July, bringing the average property price to £292,505. This marks the highest level since August 2022, just before Truss’s ill-fated mini-budget.
On an annual basis, house prices rose by 4.3% in August, the strongest increase since November 2022, which Halifax attributed largely to weaker prices from the previous year.
Amanda Bryden, Halifax’s head of mortgages, commented, “Recent price increases build on a largely positive summer for the UK housing market.
Prospective homebuyers are feeling more confident due to easing interest rates. The resilience of house prices means that the average property is now just £1,000 short of the record high set in June 2022.”
However, Bryden noted that affordability remains a “significant challenge” for many potential new homebuyers.
Bank of England data revealed that nearly 62,000 mortgages were approved for homebuyers in July, the highest number since September 2022.
The UK housing market has been supported by the Bank of England’s recent decision to lower interest rates from 5.25% to 5%, marking the first reduction in four and a half years.
In response, lenders have introduced more competitive mortgage rates, and Lloyds Bank, the largest mortgage provider in Britain, announced last month that it would increase the maximum amount it would lend to first-time buyers.
Under the £2 billion initiative, which experts believe will make homeownership accessible to more buyers, Lloyds and Halifax will now offer loans up to 5.5 times the borrower’s annual income, up from 4.49 times.
Nathan Emerson, CEO of Propertymark, remarked, “It is always encouraging to see increased consumer confidence in the housing market, and we now seem to be on a positive growth trend once again.
It is reassuring to see the market moving forward after what has been a very turbulent period, where household affordability has been nearly at breaking point for many.”
Last month, Halifax predicted that UK house prices would continue to rise for the rest of the year as mortgage rates began to fall following the interest rate cut.
Regional data showed that Northern Ireland experienced the highest property price growth of any UK region, with an annual increase of 9.8% in August, bringing the average property price to £201,043. Wales saw a 5.5% annual increase, with the average home costing £224,433.
In England, the north-west reported the strongest annual growth at 4% in August, with an average home priced at £232,917.
London remained the most expensive region in the UK, with an average property price of £536,056, reflecting a 1.5% annual increase in August.
Amy Reynolds, head of sales at estate agency Antony Roberts in Richmond, London, noted, “A small reduction in interest rates has resulted in an immediate response from the housing market, even during one of the traditionally quieter months of the year.”
On a separate note, UK housebuilder Berkeley reported stable trading between May 1, 2024, and August 31, the first four months of its current financial year.
The company expressed confidence in meeting its profit targets and supported the new government’s push to accelerate housebuilding.
Berkeley stated, “We support the proposed changes to the planning system and the government’s goal of delivering 1.5 million new homes during this parliament as part of its growth mission.
Achieving this ambition will require a shift in attitude and a renewed collaborative approach to advance stalled developments. Berkeley is committed to playing its full part in delivering the new homes the country needs.”
