"The housing market clearly isn't waiting for the Chancellor’s speech to make moves towards recovery and growth."
- Ryan McGrath, director of second charge mortgages at Pepper Money
Annual UK house price inflation was 2.8% in the 12 months to August, up from 1.8% in the year to July, according to the latest UK House Price Index from the Land Registry.
The average UK house price was £293,000 in August, £8,000 higher than 12 months ago. Average house prices increased by 2.3% in England, 3.5% in Wales, 5.4% in Scotland, and 6.4% in Northern Ireland.
Of the English regions, annual house price inflation was highest in the North West, where prices increased by 4.6% in the 12 months to August. The South West was the English region with the lowest annual inflation, where prices increased by 0.8%.
On a non-seasonally adjusted basis, average UK house prices increased more rapidly between July and August (1.5%) than in the same period 12 months ago (0.5%). On a seasonally adjusted basis, average house prices in the UK increased by 1.0% between July and August.
Sara Palmer, distribution director at The Mortgage Lender, commented: “Despite the typical summer slowdown in activity within the property market, house prices have continued to rise modestly in response, a positive sign for demand as we enter the last quarter of the year. The Bank of England’s rate dropping to 5% and mortgage lenders reducing their rates in response will have helped to drive activity and will be welcome news for those looking to buy or sell their property before the end of the year.
“Overall 2024 has been a much more stable year for the sector and many will be hoping for further good news in the upcoming Autumn Budget. First-time buyers in particular will be holding out hope for further announcements to complement Labour’s planned shake up of housing reforms and house building targets which should boost future housing supply. With so many currently reliant on the private rental sector, whatever’s announced will need to balance the need for more income into the treasury without penalising landlords that are providing much needed accommodation for renters."
Ryan McGrath, director of second charge mortgages at Pepper Money, said: “All eyes are on the Budget in a fortnight’s time, but the housing market clearly isn't waiting for the Chancellor’s speech to make moves towards recovery and growth. A modest summer house price surge after the July election is a sign of confidence steadily returning.
"House prices have been chalking up marginal but consistent gains since the start of the year, helping to put homeowners in a better financial position despite the higher interest rate environment. The pledge to shield working people from tax rises should mean this Halloween Budget doesn't spook the markets and mortgage affordability should emerge intact.
“We’ve not yet settled into ‘business as usual’ mortgage lending in the post-pandemic era, and it’s very likely the new status quo will involve a bigger and more active market for second charge mortgages than before. A £2bn market for homeowner loans is within sight while still representing the tip of the iceberg."
Richard Harrison, head of mortgages at Atom Bank, commented: “House prices have been pushed higher once more, off the back of a much more active housing market. Data from Rightmove shows that the number of agreed sales is up by 25% on this point last year, with plenty of buyers who may have put their plans on ice deciding to pull the trigger. Sellers are more confident too, with the number of new sellers up by 14% on last year, while estate agents have the highest stock levels since 2014. That’s a recipe for a much busier market in the final few months of the year, and most likely further house price growth.
“While there’s no base rate decision in October, the markets continue to expect at least one more cut before the end of the year. We saw activity pick up after the first base rate cut in four years, and a second cut will only further boost interest among buyers, as mortgage rates become more attractive.
“With the Budget on the horizon, there is a great opportunity for the Government to take real action in supporting the next generation of homebuyers. The ambition to deliver greater levels of housebuying is welcome, but it is unlikely to be enough on its own and lenders have a role to play too. Fresh thinking is needed in order to provide would-be buyers with a better chance of getting onto, or moving up, the housing ladder.”
Ben Nichols, managing director at RAW Capital Partners, added: “Today’s official data indicates that the market is benefitting from a more relaxed economic environment, which was instigated by the Bank of England’s recent rate cut. With another cut anticipated at the BoE’s meeting in November, it is clear that the market is now in a much more stable period compared to previous years, which should support further capital growth in the coming months.
“Admittedly, the upcoming Autumn Budget adds complexity, with rumours of tax and regulatory reforms dominating the property press at present. However, it’s important to remember that the core fundamentals of the market — strong demand and limited supply — remain intact. Therefore, we do not expect any significant slowdown in activity following Rachel Reeves’ speech, as the outlook for the BoE’s base rate should have a greater influence on people’s plans. Under these conditions, the growth trajectory should persist, providing some enticing opportunities for investors, brokers, and lenders.
“As the market continues to gain momentum, speed and flexibility will be crucial for success. Consequently, brokers must partner with lenders who can act swiftly to help investors and homebuyers navigate the recovering market with confidence as the BoE continues to cut the base rate.”
