Research continues to show a growing strength in the UK housing market, with a clear return of buyer confidence amid an improving mortgage market.
While 2023’s housing market showed signs of slowing down due to factors such as the aftermath of the Liz Truss mini-budget, increased interest rates and mortgage costs, and wider economic turbulence linked to the cost of living crisis, 2024 so far has proven to be a very different year.
Although house prices remained extremely resilient throughout these events, the acceleration of previous years came to a halt, but the UK housing market has returned to growth this year – and the latest house price index from Halifax reveals the biggest jump in prices since November 2022 for September.
The index, which looks at mortgaged house prices through the bank, unveils a new average property price of £293,399, which is only marginally short of the all-time high of £293,507 in June 2022. It represents a month-on-month rise of 0.3%, but a 4.7% annual hike.
The bank puts this down to a number of factors, but mainly a boost in buyer confidence thanks to easing mortgage affordability – with mortgage rates firmly down from last year’s highs, albeit still above the historic lows seen before the mini-budget – coupled with strong wage growth.
The expectation now is that this trend of steadily rising prices is likely to continue for the rest of this year and into next, with a greater level of certainty among buyers that their purchase will continue to gain in value – in some locations more than others.
UK housing transactions show rude health
While prices are an important indicator of the market’s health, and the balance between supply and buyer appetite, transaction levels are also a crucial factor to consider, and these too have been boosted over the course of 2024.
The latest research from the Office for National Statistics (ONS) reveals that the number of homes sold in August this year exceeded 100,000 (on a non-seasonally adjusted basis) for the first time in two years, rising to a current provisional estimate of 104,330.
In the 2024 to 2025 financial year, the ONS predicts that there will have been 462,210 properties bought and sold in the UK housing market, which is up from 416,910 last year, and is more in line with the 10-year average.
Commenting on both the latest house price results and the UK housing market transaction figures, Guy Gittins, chief executive of Foxtons, said: “Increased mortgage market certainty is allowing UK buyers to act with greater confidence and we’ve seen the rates available on many mortgage products continue to trend downwards since a hold on the base rate in September of last year.
“Not only has this helped to accelerate the rate of house price growth being seen across the UK property market, but we’re now seeing transactional volumes climb as these sales make it over the line.
“In fact, the latest government figures show that in August, the number of monthly transactions exceeded the 100,000 threshold for the first time since December 2022. A very positive sign indeed and a strong indication that the market is now returning to form.”
Mortgages agreed up by 40%
As mortgage rates have steadily fallen over the past year – in both the standard residential space and the buy-to-let sector – more prospective buyers have been able to take advantage, who may have been holding off in 2023.
Economists are largely predicting that the Bank of England will announce a base rate drop at the next MPC meeting, but even without this lenders are showing that they are back in competition, reducing rates and adding products to their books. This is improving the environment for anyone borrowing to buy, and boosting UK housing market appetite.
Amanda Bryden, Head of Mortgages, Halifax, said: “Market conditions have steadily improved over the summer and into early autumn. Mortgage affordability has been easing thanks to strong wage growth and falling interest rates.
“This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.”
Keep up to date with the latest UK housing market news and updates here.
