"Mortgage rates have risen in recent weeks on the back of higher Swap rates, with no sub-4% fixed rates now on offer."
- Mark Harris, chief executive of SPF Private Clients
Average UK house prices increased by 2.9% in the 12 months to September, up from 2.7% in August, according to the latest UK House Price Index.
Annual inflation has been generally increasing since its low point of -2.7% in the 12 months to December 2023.
Average house prices increased by 2.5% in England to £309,000, 0.4% in Wales to £217,000, 5.7% in Scotland to £198,000, and 6.2% in Northern Ireland to £191,000.
The North East was the English region with the highest house price inflation in the 12 months to September, at 6.5%, up from 2.1% in the 12 months to August.
Annual house price inflation was lowest in London, at a decrease of 0.5% in the 12 months to September, down from an increase of 1.2% in August.
On a non-seasonally adjusted basis, average UK house prices fell by 0.3% between August and September, compared with a decrease of 0.5% in the same period 12 months ago. On a seasonally adjusted basis, average house prices decreased by 0.1%.
Emma Cox, MD of real estate at Shawbrook, commented: “House prices continued to rise year-on-year in October despite heightened uncertainty in the lead up to the budget. Buyers and sellers acted swiftly to try and conclude deal activity prior to any potential government announcements and ahead of the usual winter slowdown, however, property prices did see a slight dip in comparison to last month.
“Many will be keeping a close eye on how the market reacts following the Chancellor’s announcements. The decision not to extend stamp duty relief for first-time buyers, while likely to give a short-term boost to activity levels, could mean a longer term slowdown in the market. First-time buyers make up the majority of new build purchases, so removing key incentives will likely be counterproductive to reaching the Government's ambitious house building targets."
Richard Harrison, head of mortgages at Atom Bank, said: “A recent spike in activity in the housing market has prompted this latest house price rise. Data from Rightmove shows that the number of sales is up by nearly a third compared to a year ago, while there has also been strong growth in buyers contacting estate agents about listed properties, which is up by 17%. The glaring imbalance between housing supply and the resurgent demand from would-be homeowners is only likely to push prices higher still as we head into 2025.
“Interest from buyers will be further buoyed by the latest base rate cut, however today’s sharp rise in inflation may temper the prospects of a further cut next month. For now, buyers will have to move quickly in order to secure deals - data from Moneyfacts shows that the number of products on offer, and their typical ‘shelf life’ before being withdrawn, have both dropped sharply.
“This increased sense of urgency will be accelerated further by the lowering of the stamp duty bands which apply to first-time buyers from March 2025, as would-be purchasers attempt to beat that deadline. This is likely to prompt increased completion levels in Q1, with the competition driving house prices up. First-time buyers with modest deposits may see the prospect of homeownership become more difficult as a result, which means lenders need to step up and deliver competitive, high LTV products. The housing ladder relies on people being able to access the first rung.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “With inflation rising to 2.3%, the Bank of England could well be cautious at next month’s meeting and press the hold button rather than cut base rate further.
“Further rate reductions are more likely next year than this one, with Swap rates rising on the back of today’s inflation figures. However, while inflation rose more than expected, it’s still only just above the 2% target and fluctuations are not unexpected.
“Mortgage rates have risen in recent weeks on the back of higher Swap rates, with no sub-4% fixed rates now on offer. That said, fixes are pegged only just above this level so borrowers should not panic."
