The housing market is showing signs of revival, with a more optimistic outlook expected to continue in the coming months, according to some finance experts. This follows the release of new data indicating an uptick.
On Monday, Nationwide Building Society reported that annual house price growth in September accelerated to the fastest rate seen in about two years. Property values are now just 2% below the all-time highs recorded in the summer of 2022.
UK house prices rose by 0.7% in September, pushing the annual growth rate from 2.4% in August to 3.2% in September, the fastest pace since November 2022, when there was a 4.4% increase, according to Nationwide.
Several factors contributing to the broader economic recovery are also benefiting the housing market. The Bank of England’s Money and Credit report, also released on Monday, showed that mortgage approvals for home buyers jumped to a two-year high in August, with 64,900 loans approved, up from 62,500 in July.
Experts attribute the housing market’s support to improving mortgage rates, easing rises in other living costs, and stronger household incomes.
The combination of a 3.2% year-on-year increase in the Nationwide house price index in September and a rise in mortgage approvals to 64,900 in August, the highest level in two years, reinforces the view that the housing market is reviving and will continue to improve into 2025.
Factors such as lower inflation, higher household incomes, lower interest rates, and recovering consumer confidence are expected to drive housing transactions and prices higher. Lenders are pricing in more rate cuts by the Bank of England, with the best-buy five-year fixed rates slipping below 3.7% for the first time this year. With house prices still about 2% below the record highs of summer 2022, there is room for growth.
Price rises of between 4% and 5% are expected by the end of the year, with strong increases in households’ real disposable incomes and rising consumer confidence likely to boost domestic demand and economic growth through the second half of the year and into 2025.
According to Nationwide, the average UK house price in September is £266,094, around 2% below the all-time highs recorded in summer 2022.
Income growth has recently outpaced house price growth, while borrowing costs have edged lower amid expectations of further interest rate cuts by the Bank of England. These trends have improved affordability for prospective buyers and supported a modest increase in activity and house prices, though both remain subdued by historical standards.
Reports indicate more inquiries, offers, and sales agreements are being made.
Guy Gittins, chief executive of estate agent Foxtons, said: “We’re already seeing more inquiries made, more offers submitted, and more sales agreed, all of which bodes very well for the remainder of the year and beyond.”
Jeremy Leaf, a north London estate agent, noted: “The market has changed, and demand is improving, coinciding with lower mortgage rates and a more settled picture for inflation and politics. This shift has resulted in more appraisals, listings, offers, and firming pricing.”
Nathan Emerson, chief executive of Propertymark, added: “Although we are still at the very start of the journey regarding base rates, we are starting to see lenders introduce improved competitive offerings for mortgage deals.”
Holly Tomlinson, a financial planner at wealth manager Quilter said: “Lenders are competing to attract custom, and a more stable environment is likely to mean they go further with rate cuts.”
Some experts suggested that the looming Budget and expectations of possible further rate cuts could lead some potential home movers to pause for thought.
Matt Thompson, head of sales at estate agent Chestertons, said: “We expect September’s level of market activity to continue in October but sellers will review their position following the autumn Budget whilst some buyers await the next Bank of England announcement on interest rates in November.”
Jonathan Hopper, chief executive of Garrington Property Finders, said: “Prices are rising fastest in more affordable locations and there’s a clear North-South divide.
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “Improving mortgage rates and strong income growth have eased the affordability challenge for some buyers in recent months, with the Bank of England’s interest rate cut at the start of August and prospect of at least one more rate reduction to come this year energising the residential property market.”
A survey for online budgeting tool IE Hub, released on Monday, indicated that nearly a third of mortgage holders (31%) are still worried about interest rates rising, despite the Bank of England base rate recently being cut from 5.25% to 5%.
A fifth (20%) of homeowners surveyed said their mortgage is significantly more than it used to be. Nearly a quarter (24%) said they will move mortgages when their current deal ends to try and reduce the costs and 16% have been looking into ways of managing paying their new rates.
Here are average prices in the three months to September and the annual change, according to Nationwide Building Society:
Northern Ireland, £196,197, 8.6%
North West, £215,807, 5.0%
Scotland, £184,471, 4.3%
Yorkshire and the Humber, £206,493, 4.3%
North East, £161,066, 3.2%
Wales, £207,113, 2.5%
London, £524,685, 2.0%
Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £424,345, 1.9%
East Midlands, £232,390, 1.8%
West Midlands, £243,599, 1.0%
South West, £303,522, 0.6%
Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £336,253, 0.6%
East Anglia, £270,906, minus 0.8% City and Countrywide are actively offering opportunities for you to invest into exclusive developments, in well researched locations and If you would like to explore these opportunities, then please either call us on +442081446222 email us at infor@cityandcountrywide.com
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