(Bloomberg) -- UK house prices came within a whisker of a record high, climbing for a second straight month after the Bank of England cut interest rates, data from Halifax showed.
The mortgage lending giant said the average price of a typical UK home rose 0.3% last month to £292,505 ($385,450) after an upwardly revised 0.9% gain in July. This is now just £1,000 short of the peak reached in June 2022.
It left prices up 4.3% from a year earlier, the fastest annual increase since November 2022, Halifax said.
The increase came after the BOE cut rates from a 16-year high on Aug.1 and will add to growing optimism over the housing market strengthening this autumn after a patchy recovery so far in 2024.
However, it conflicted with data from Nationwide Building Society last week that showed a month-on-month fall in prices in August. Halifax and Nationwide’s figures are based on their own mortgage books, leading to some discrepancies between months.
“Prospective homebuyers are feeling more confident thanks to easing interest rates,” said Amanda Bryden, head of mortgages at Halifax. “Recent price rises build on a largely positive summer for the UK housing market.”
She 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.”
A number of lenders have cut mortgage rates in recent weeks, reductions that could help fuel interest from potential buyers. The cheapest five-year fixed mortgage rate has fallen to its lowest level since before former Prime Minister Liz Truss caused upheaval in the property market in 2022 with her plan for £45 billion of unfunded tax cuts.
Annual price growth in London lagged behind the national figures, with values increasing 1.5%. However, prices in capital are the most expensive of any region at £536,056, almost double the national average. Northern Ireland enjoyed the strongest price gains at 9.8% with Wales also seeing sharp rises.
“Today’s data release supports our view that the housing market isn’t on the precipice of a new downturn,” said Ashley Webb, UK economist at Capital Economics.
“If we’re right to think that Bank Rate will eventually fall from 5% now to 3%, the resulting drop in mortgage rates should boost demand and give house prices renewed impetus next year,” he said.
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