"The usual autumn uptick in activity seems to have arrived ahead of schedule, with today’s data showing house prices moving upwards."
- Josh Skelding, commercial director at Fignum
UK house prices increased by 2.2% in the 12 months to July, the fifth consecutive annual increase in prices but down from the 2.7% recorded in June, according to the latest UK House Price Index from the Land Registry.
The average UK house price was £290,000 in July, which is £6,000 higher than 12 months ago. Average house prices increased by 1.6% in England, 2.0% in Wales, 6.0% in Scotland, and 6.4% in Northern Ireland.
Of the English regions, annual house price inflation was highest in the North East, where prices increased by 3.8% over the 12 months. London was the English region with the lowest annual inflation, where prices decreased by 0.4%.
On a monthly basis, average UK house prices increased more slowly between June and July (0.6%) than in the same period 12 months ago (1.1%). On a seasonally adjusted basis, average house prices fell by 0.4% between June and July 2024.
Richard Harrison, head of mortgages at Atom Bank, commented: “There is clear momentum building in the housing market currently. The first base rate cut in four years has helped spark activity and a bit of competition among lenders, bringing back prospective buyers who might have put deals on hold. For example, Rightmove has suggested that the number of interested buyers contacting estate agents is up by 19% compared with a year ago.
“Lower mortgage rates are undoubtedly playing a part here, and while another base rate cut this week looks unlikely, the markets seem to expect another cut before the end of the year, spelling more good news for potential buyers. Moneyfacts data shows that average interest rates for two- and five-year fixed rates have fallen for two straight months, a trend that borrowers will hope to see continue.
“September marks the two-year anniversary of the ill-fated mini-Budget, an excellent reminder of the devastating impact the political world can have on mortgage rates and the housing market. With the Budget due next month, I hope the new Government is thinking carefully about how it can positively shape the prospects for homebuyers and homeowners in the years ahead, particularly first-time buyers. The housing ladder can only function if people are able to get onto that first rung.”
Josh Skelding, commercial director at Fignum, said: “The usual autumn uptick in activity seems to have arrived ahead of schedule, with today’s data showing house prices moving upwards. Thanks to falling mortgage rates, both buyers and sellers are becoming more active, boosting demand and gradually pushing house prices up. If interest rates are cut again in the coming months, we’ll only see further gains in the market, helping to keep house prices on a positive trajectory.
“That said, a few challenges need to be addressed first which could dampen demand. With energy costs set to jump 10% next month and the October Budget bringing possible tax increases, consumers may hit pause to reassess their buying plans. Landlords, in particular, could be discouraged from growing their portfolios with capital gains tax expected to increase.
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “With inflation sticking at 2.2% and expected to edge up in the autumn, it’s unlikely this will trigger a further rate cut from the Bank of England this month, although the markets still expect at least one further rate reduction before the end of the year.
“The good news for borrowers is that mortgage rates continue to soften, with Santander introducing a sub-4% two-year fix on the back of the lowest two-year Swap rates in two years. There are also plenty of five-year fixes at sub-4% for those looking for certainty over a longer period.
“While rock-bottom rates have long gone, these reductions are giving borrowers some comfort after a prolonged period of rising rates. Competition between lenders is likely to mean further gentle reductions in mortgage rates as they vie for new business."
