Annual house price growth picked up in August to the fastest rate since December 2022, according to an index.
Across the UK, property values increased by 2.4 percent annually, Nationwide Building Society said. This took the typical house price to £265,375.
Robert Gardner, Nationwide’s chief economist, said: “UK house prices fell by 0.2 percent month-on-month in August, after taking account of seasonal effects, but the annual rate of house price growth continued to edge higher.
“Average prices were up 2.4 percent year-on-year, a slight pick-up from the 2.1 percent recorded in July and the fastest pace since December 2022 (2.8 percent).
“However, prices are still around three percent below the all-time highs recorded in the summer of 2022.”
Mr Gardner noted that, while house price growth and activity remain subdued by historic standards, they nevertheless present a “picture of resilience” in the context of the higher interest rate environment and where house prices remain high relative to average earnings.
He added: “Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Some estate agents have noted that buyer activity has “stepped up a gear” since the general election.
Colby Short, co-founder and CEO of GetAgent.co.uk, commented: “Patience has certainly been a virtue for UK home sellers in recent times, but there’s no doubt that they are now being rewarded, as the UK property market continues to demonstrate a high level of resilience with yet another annual increase in property values and the largest increase since December 2022.
“This growth is being driven by an uplift in buyer activity and whilst this has been building since the start of the year, we’ve certainly seen it step up a gear since the general election.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager said: “The UK’s residential property market appears to be in recovery mode following the turbulence of 2023 when high borrowing costs and low supply stifled activity and dampened prices.
“With more sub-four percent mortgage rates now available and the prospect of more interest rate cuts this year, buyers are flooding back into the market as improving affordability levels raise the likelihood that people can get their desired home.
“Meanwhile, sellers, who have been sitting on the sidelines waiting for better market conditions, now feel confident to list their homes, though those hoping for a good deal may find the glut of new properties for sale along with mortgage rates that are still relatively high could keep a lid on prices for now.”
Peter Stimson, head of product at MPowered Mortgages said: “The important annual rate of growth improved in August, highlighting the continued resilience of the property market. Typically, purchase activity drops by around 10 percent in August as people spend more time on Ryanair than Rightmove.
“This month, however, has been about as un-August an August that you could get. The feel-good factor from the Bank of England reducing the base rate on the first day of the month, and ongoing rate cuts from lenders, almost certainly contributed to the increased activity levels we have seen. What’s interesting is that mortgage rates continue to drop while swaps have remained more or less stable since the beginning of the month.
“Competition between lenders is the most intense I have seen in 30 years of working in the mortgage industry. From a margin perspective, the current lending environment is brutal and the rate cuts we’re seeing are almost certainly not sustainable with swaps where they are. Though it’s looking like the momentum could continue into September, all eyes are increasingly turning to the Autumn Budget and any announcements that could hit markets and mortgage pricing. Let’s hope it is a Budget the markets believe in.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The days of rock-bottom mortgages may be long gone but more palatable pricing is helping sentiment.
“Now that the Bank of England has reduced rates, it sends out a strong message that they have not only peaked but are on a downward trajectory after months of uncertainty. It enables people to make decisions with confidence and we anticipate a strong autumn market although the Budget looms ominously.”
Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said: “It’s been a very successful month, with a large number of sales agreed in all price ranges at a time when agents usually complain it is quiet.
“As the (Bank of England base) rate reduction was widely expected, we were ready – encouraging sellers to reduce their price, or launch their properties at the end of July/beginning of August, rather than wait until September as most would usually choose to do.”
