(qlmbusinessnews.com Tues. 1st Oct, 2024) London, UK —
House Prices Experience Fastest Growth in Nearly Two Years.
House prices across the UK rose by 3.2% in September compared to the same time last year, marking the fastest rate of growth since November 2022, according to figures from Nationwide. The rise in property prices has largely been driven by terraced homes.
Nationwide reported that improving affordability, due to increasing incomes and recent mortgage rate reductions, has encouraged more buyers into the market. Data from the Bank of England also revealed that mortgage approvals had reached their highest level in two years, reflecting renewed market activity.
The average house price in the UK now stands at £266,094. Nationwide’s data, which is based on its own mortgage lending, showed a 0.7% price increase in September compared to August, which had seen a slight decline.
Robert Gardner, Nationwide’s Chief Economist, noted that “Income growth has been outpacing house price increases in recent months, and borrowing costs have eased amid expectations that the Bank of England will continue to reduce interest rates in the months ahead. These factors have helped improve affordability for prospective buyers.”
However, he added that while activity in the housing market has picked up, it remains subdued compared to historic trends.
Amy Reynolds, head of sales at estate agency Antony Roberts, advised sellers that, despite the rising prices, homes priced too high are often ignored by potential buyers. She suggested adjusting prices to the current market level for a better chance of attracting viewings.
Mortgage Competition Increases.
The housing market is seeing increased competition among lenders, with providers focusing on offering the best mortgage deals to new homebuyers rather than those remortgaging. Nationwide has recently introduced a mortgage scheme allowing new borrowers to apply for a loan of up to six times their income with just a 5% deposit, but only on five or ten-year fixed-rate deals.
Other lenders have also been cutting interest rates, though the cost of deposits and monthly repayments remains a significant barrier for first-time buyers.
Commentators suggest that if interest rates continue to fall, demand from buyers could further increase, potentially invigorating the housing market after a relatively stagnant year.
Bank of England data showed that mortgage approvals for house purchases rose to 64,900 in August, up from 62,500 in July – the highest since the period just before the 2022 mini-budget.
Terraced Homes Lead Price Increases.
Nationwide’s survey revealed that terraced homes have seen the largest price increase over the past year, with prices rising by 3.5% on average. Semi-detached homes saw a 2.8% rise, flats increased by 2.7%, and detached houses by 1.7%.
These figures reflect a shift from the “race for space” during the pandemic when larger homes saw substantial price hikes.
It should be noted that Nationwide’s data only considers buyers who use mortgages, excluding those who pay in cash or invest in buy-to-let properties. Cash buyers make up roughly one-third of housing transactions.
Halifax, a rival lender, is set to release its house price index for September in the coming days, providing further insights into the state of the UK housing market.
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