September has witnessed the highest annual surge in house prices for nearly two years, according to new figures.
Nationwide Building Society reports that UK house prices saw a 0.7% increase in September. This uptick has pushed the annual price growth rate from 2.4% in August to 3.2% in September, marking the quickest growth since November 2022's 4.4% rise.
The average UK house price now stands at £266,094. Northern Ireland outshone other regions with an 8.6% year-on-year price increase in the third quarter, Nationwide revealed. In contrast, East Anglia lagged behind, with a 0.8% decrease over the same period.
Nationwide's chief economist, Robert Gardner, commented: "Average prices are now around 2% below the all-time highs recorded in summer 2022. 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 factors have reportedly enhanced affordability for potential buyers, leading to a modest rise in both activity and house prices, although they remain subdued by historical standards. Gardner further noted: "Scotland saw a noticeable acceleration in annual growth to 4.3% (from 1.4% in the second quarter), while Wales saw a more modest 2.5% year-on-year rise (from 1.4% the previous quarter). Across England as a whole, there was a 1.9% increase compared with the third quarter of 2023.
"Northern England (comprising North, North West, Yorkshire and the Humber, the 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% year-on-year."
"Southern England (the South West, Outer South East, Outer Metropolitan, London and East Anglia regions) saw a 1.3% year-on-year rise. London remained the best performing southern region with annual price growth of 2.0%."
Mr Gardner said Nationwide’s most recent data by property type indicates terraced houses have seen the biggest percentage rise in prices over the past year, with average prices up by 3.5%. Semi-detached and flats saw increases of 2.8% and 2.7% respectively. Whilst detached houses recorded growth of 1.7%.
Mr Gardner added: "If we look over the longer term however, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since (the first quarter of) 2020, the price of an average detached property increased by nearly 26%, while flats have only risen by (around) 15% over the same period."
Sarah Coles, head of personal finance, Hargreaves Lansdown said: "These aren’t runaway price rises, but they’re firmly positive, which always helps boost buyer sentiment and keep the wheels rolling on the property bandwagon." Iain McKenzie, CEO of the Guild of Property Professionals, observed: "House prices usually remain robust at this time of the year, as there is still time to buy, complete and move in before Christmas."
Guy Gittins, CEO of estate agent Foxtons, expressed optimism: "We’re already seeing more inquiries made, more offers submitted and more sales agreed, all of which bodes very well for the remainder of the year and beyond." North London estate agent Jeremy Leaf noted a positive shift: "The market has changed and demand is improving which has coincided with lower mortgage rates and a more settled picture for inflation and politics. This shift has resulted in more appraisals, listings, offers and firming pricing."
Verona Frankish, Yopa's chief executive, offered a cautious outlook: "The base rate still remains significantly higher than we’ve seen in recent years and whilst buyers are returning with confidence, we’re not quite out of the woods yet with respect to transactional volumes, which still remain someway off the previous pace."
Marc von Grundher, director of Benham and Reeves, highlighted the property market's strength: "The property market has continued to prove its resilience, with house prices now increasing at their fastest rate in two years and climbing close to historic record highs."
Nathan Emerson, the chief of Propertymark, has pointed out the beginnings of a positive shift in the mortgage landscape. He remarked: "Although we are still at the very start of the journey regarding base rates, we are starting to see lenders introduce improved competitive offerings when it comes to mortgage deals."
Meanwhile, Quilter's financial planner Holly Tomlinson weighed in on the BoE's decision, saying, "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."
Matt Thompson from Chestertons said: "We expect September’s level of market activity to continue in October but sellers will review their position following the autumn Budget whilst some buyers await the next Bank of England announcement on interest rates in November. The pace of the recovery still varies considerably by region. ".
Jonathan Hopper, chief executive of Garrington Property Finders, said: “The pace of the recovery still varies considerably by region. Prices are rising fastest in more affordable locations and there’s a clear North-South divide. This split reveals that while buyer appetite is strong, many buyers remain highly price sensitive and value is key.”
Here are average prices in the three months to September and the annual change, according to Nationwide Building Society:
Northern Ireland, £196,197, 8.6%
North West, £215,807, 5.0%
Scotland, £184,471, 4.3%
Yorkshire and the Humber, £206,493, 4.3%
North East, £161,066, 3.2%
Wales, £207,113, 2.5%
London, £524,685, 2.0%
Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £424,345, 1.9%
East Midlands, £232,390, 1.8%
West Midlands, £243,599, 1.0%
South West, £303,522, 0.6%
Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £336,253, 0.6%
East Anglia, £270,906, minus 0.8%
