(Bloomberg) -- UK house prices rose for a third consecutive month in September as cheaper mortgages and increased incomes spurred more buyers into the market, data from Halifax showed.
The mortgage lender said the average price of a typical home increased 0.3% to £293,399 ($384,900), just short of the record level reached in June 2022. House prices were 4.7% higher than a year earlier.
The housing market is growing again following a patchy recovery at the start of the year and after escaping a predicted crash in 2023. Rising real incomes and the Bank of England’s first interest-rate cut since the pandemic in August are helping unlock pent-up demand, encouraging prospective home owners to come off the sidelines.
Comments by BOE Governor Andrew Bailey last week, in which he suggested rate cuts could become “a bit more aggressive” if inflation remains subdued, will only add to that confidence boost.
“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,” said Amanda Bryden, head of mortgages at Halifax. “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.”
She added: “While improved mortgage affordability should continue to support buyer activity – boosted by anticipated further cuts to interest rates – housing costs remain a challenge for many. As a result we expect property price growth over the rest of this year and into next to remain modest.”
The report adds to evidence that the UK housing market is on track for growth. Separate figures from Nationwide Building Society last week showed house prices rose the most since February last month, while Rightmove said average asking prices increased at twice the usual pace.
House prices grew across all UK regions in the year through September, Halifax said. Northern Ireland continued to see the strongest gains, with prices up 9.7%. The value of homes in London — the UK’s most expensive region — increased 2.6% to £539,238. That’s £13,354 below the peak set in August 2022.
“We expect low single-digit price growth this year as rates continue to drift lower, with the budget the main cause of uncertainty on the horizon,” said Tom Bill, head of UK residential research at Knight Frank. “If it’s better than feared, there is likely to be a relief bounce in activity before Christmas that lasts into next spring.”
(Adds updated chart. A previous version of this story was corrected to say most since February in seventh paragraph)
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