UK posts fastest home price growth since February, mortgage lender says
Average house price is up 3.2% from a year ago at £266,094, amid lower borrowing costs and expectations of further rate cuts
UK HOUSE prices returned to growth in September, said one of the country’s top mortgage lenders, indicating that the first interest rate cut by the Bank of England (BOE) is bringing buyers back into the market.
The Nationwide Building Society said its gauge of home prices increased 0.7 per cent in September, following a surprise fall last month. Economists surveyed by Bloomberg had expected growth of 0.2 per cent.
The reading was the gauge’s strongest month-on-month showing since February. The average house price rose to £266,094 (S$457,168), up 3.2 per cent from a year ago – the fastest annual increase in two years.
“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,” said Robert Gardner, chief economist at Nationwide.
“These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”
The housing market is strengthening after a patchy recovery in the first half of the year. Rising real incomes, stronger savings and easing mortgage costs are boosting demand, while a more stable economic outlook is bringing more sellers to the market.
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Strong September figures add to evidence of a housing activity boost in the wake of the BOE’s first rate cut since the pandemic in August. Rightmove data also revealed asking prices for UK homes rose at double the expected pace in September.
The UK is also building homes at the fastest pace in almost two years. This brings UK Prime Minister Keir Starmer closer to meeting his key pledge to build 1.5 million new homes over the next five years.
Nationwide’s release last month showing a surprise fall in house prices was out of step with most other reports pointing to growing optimism in the market.
A separate report from the Royal Institution of Chartered Surveyors indicated buyer demand and sales increased in August, while Halifax figures showed house prices getting close to record highs last month.
Nationwide said house prices rose across most UK regions in the third quarter of this year. Northern Ireland was the best performing region with prices up 8.6 per cent year on year.
Hybrid working patterns after the pandemic are still affecting housing demand. Detached house prices saw a 26 per cent increase since the first quarter of 2020, compared to just 15 per cent for flats.
“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,” Gardner said. BLOOMBERG
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