House prices in the UK have been on the rise for the third consecutive month, reaching the highest point in over two years. Data shows that there was a 0.3 per cent increase in house prices from August to September, with an annual rise of 4.7 per cent. This brings the average property value to £293,399, up from £292,540 the previous month. Despite these positive numbers, experts are urging caution when interpreting the data. Halifax’s head of mortgages, Amanda Bryden, pointed out that the increase in property value over the past year is mainly a recovery from losses in the previous year. Looking back two years, prices have only increased by 0.4 per cent.
Bryden predicts that property price growth will remain modest for the rest of the year and into the next. She mentioned that improved mortgage affordability and anticipated interest rate cuts should support buyer activity, although housing costs still pose a challenge for many. London continues to have the most expensive properties in the UK, with the average home valued at £539,238, a 2.6 per cent increase from last year.
Economists are optimistic that the Bank of England will be able to reduce rates in November, which could further stimulate the housing market. Tom Bill, head of UK residential research at Knight Frank, expects low single-digit price growth this year as rates continue to decline. The upcoming Autumn Budget is seen as a source of uncertainty, with potential tax increases, especially for high earners.
Matt Thompson, head of sales at Chestertons, noted that lower interest rates and mortgage products below 4% have led to an increase in buyer activity. Sellers are also motivated to put their properties on the market, anticipating changes to Capital Gains Tax in the Autumn Budget. Emma Jones, managing director at Whenthebanksaysno.co.uk, highlighted that falling mortgage rates and strong wage growth are boosting affordability in the market.
However, there are challenges on the horizon, including inflation, the conflict in the Middle East, and the upcoming Budget. Stephen Perkins, managing director at Yellow Brick Mortgages, mentioned that the market has been resilient but could face challenges from the Autumn Budget. David Stirling, an independent financial adviser at Mint Mortgages & Protection, expressed optimism about the downward trend in interest rates but warned of potential market disruptions from various factors.
Overall, the housing market in the UK is seeing growth, driven by factors such as low mortgage rates and increased affordability. While there are uncertainties ahead, such as the Autumn Budget and geopolitical issues, experts remain cautiously optimistic about the market’s resilience in the face of potential challenges.
