Slow and steady growth points towards a healthy UK housing market, led by the North West which continues to power ahead.
The housing market continues on its upwards trajectory this month, which most analysts expect will continue as the possibility of more interest rate cuts and a strengthening economy will continue to fuel appetite for UK property.
After a 0.3% month-on-month climb, the average property now costs £292,505, according to the latest Halifax House Price Index. This is 4.3% higher than this time last year, and marks the fastest annual growth since November 2022.
Although the Bank of England has so far only reduced its base rate on one occasion this year, from the 16-year high of 5.25% down to 5%, this has already created a ripple effect of confidence within the market, which Halifax believes plays a big part in the growth of the housing market.
Ongoing resilience in UK housing market
The UK housing sector has proven resilient through numerous knocks, demonstrating overwhelming long-term growth even after relatively short-term sticky periods. This resilience is a factor noted by Amanda Bryden, Head of Mortgages at Halifax.
“Such has been the resilience of house prices that the average property is now just £1,000 shy of the record high set in June 2022 (£293,507),” she said.
Amanda added: “With market activity picking up and the possibility of further interest rate reductions to come,
we expect house prices to continue their modest growth through the remainder of this year.”
Commenting on the figures, Nathan Emerson, CEO at Propertymark, said: “It is always encouraging to see enhanced levels of consumer confidence within the housing market, and we now appear to be firmly following a positive trend of growth once again.
“It is reassuring to witness the market moving forward from what has been a very fluid few years, where household affordability has been at near breaking point for many people. As the benefits of lower inflation and interest rates fully start to bed in, Propertymark is confident there will be further market growth as the year plays out.”
Leading location
Across the UK housing market as a whole, Northern Ireland is continuing to record the highest levels of house price growth. The country saw prices rises by 9.8% between August 2023 and August 2024, bringing the average property cost there up to £201,043.
Wales is another country ahead of the average, with 5.5% annual growth, and the average home in the country now costs £224,433.
However, when looking solely at England’s housing market, the standout region remains the North West. Prices there have risen more than anywhere else in the country, climbing by 4% over the past 12 months to bring the average property price up to £232, 917.
While experiencing the strongest growth, it is also home to below-average property prices, making it a particularly attractive prospect for property investors seeking good prospective capital growth at a lower price point. The region is also known for its higher than average rental yields, as rental demand continues to grow.
Comments from the industry
Overall, Halifax’s latest results have been met with a positive response from individuals and companies across the housing market.
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “House prices gained momentum in August, setting the stage for a potential Autumn boost.
“Property transactions in September are typically 12% higher than in August, a trend that looks likely to continue this year.
“Recent moves by the Bank of England to cut the base rate and predictions for another potential cut later in the year should further fuel market activity.
“Inflation also remains close to the government’s 2% target — although it is expected to rise slightly — helping to boost buyer confidence in 2024.
“With lower mortgage rates and easing financial pressures, more buyers are pulling the trigger on their moving plans. Meanwhile, more first-time buyers are stepping into the market after many were previously priced out by high repayment costs.
“While house prices are steadily rising, an increase in housing supply — up 14% year-on-year in August — should help control price inflation. The number of homes listed for sale is at a seven-year high, helping balance out rising demand.
“Possible tax increases in October’s budget may temper this momentum slightly, and affordability challenges continue to impact some buyers. Despite this, there is cautious optimism that the current strength of the property market will help it navigate these challenges and hopefully remain on a steady growth path.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “Recent data has sent mixed messages about the state of the UK’s housing market, but today’s figures suggest we’re heading for an awesome autumn.
“Market activity has been quietly picking up over the summer, and economic indicators are starting to point in the right direction.
“Headline inflation seems to be holding steady just over the 2% target by the Bank of England. It is worth noting that affordability concerns remain, as not all households are seeing living costs come down.
“It will be interesting to see how high-street banks react to interest rates creeping down. They are guilty of being cautious when it comes to passing immediate changes onto the consumer, so it may be a while until we see lower borrowing costs and more mortgage offers return to the market.
“A structural undersupply of housing remains in many parts of the UK, which continues to provide some support for prices. The new government’s priority of building new homes would increase supply, but would not have any sudden impact on driving prices down.
“Many buyers see the autumn months as the time to make a move, with families in particular keen to be in their new home for Christmas. We expect to see house prices rise between now and the end of the year.”
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