Halifax has reported that house prices increased by 0.2% in October, which represents a fourth monthly increase in a row.
This means that year-on-year prices are up 3.9%, easing from 4.6% in September, according to the mortgage lender.
AVERAGE PRICES
A typical property now costs £293,999, beating the previous high of £293,507 in June 2022.
Across the UK, Halifax said Northern Ireland continues to record the strongest annual house price growth.
“Despite the affordability challenge, market activity has been improving”
Amanda Bryden, head of mortgages at Halifax, said: “Average UK house prices nudged up +0.2% in October, continuing the positive momentum of recent months. This brought the annual growth rate to +3.9%, slightly lower than in September. The average property price has reached a record high of £293,999, surpassing the previous peak of £293,507 set in June 2022, towards the end of the pandemic-era ‘race for space’.
“That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place. Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years, recording a +0.2% increase overall. That’s a significant slowdown compared to the +21% rise we saw in the equivalent period from January 2020 to the summer of 2022.
“Despite the affordability challenge, market activity has been improving. The number of new mortgages agreed recently reached its highest level in two years. This aligns with average mortgage rates dropping steadily since spring – now over 160 basis points lower than in summer 2023 – coupled with continued positive income growth.
“Looking ahead, borrowing constraints remain a challenge for many buyers. Following the budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer. New policies like higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers might also affect demand.
“While we expect house prices to keep growing, it will likely be at a modest pace for the rest of this year and into next.”
“With the Budget behind us, we now have greater certainty”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “The Bank of England rate reduction in August boosted buyer confidence, leading to an uptick in applicant registrations, viewings, and offers, contributing positively to our fourth quarter revenue. A further rate drop today would likely encourage more vendors to sell and buy, encouraging people off the fence.
“With the Budget behind us, we now have greater certainty. We are cautiously optimistic but concerned about the future stamp duty rate change for first-time buyers. Do they realise how long it takes to complete a purchase? If the Bank does cut rates today and the mortgage market reacts positively, first-time buyers should seriously consider making their move to agree a purchase before Christmas, as delays could prove costly.”
BUOYED HOUSING MARKET
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The housing market has been significantly buoyed by lower mortgage rates, leading to more interest from prospective buyers and increased activity.
“Since UK gilt yields rose in the immediate aftermath of the Budget, this has had an effect on Swap rates which underpin the pricing of mortgages, providing an indicator as to where interest rates will be. With the exception of a few lenders who purchased Swaps before the Budget, mortgage pricing has edged upwards.
“The Bank of England is still expected to cut interest rates later today which would help boost confidence and affordability, particularly as this trend is expected to continue, albeit at a slower pace than previously thought, into the new year.”
LOOMING DEADLINE
Holly Tomlinson, financial planner at Quilter, added: “The Halifax House Price Index for October reveals that UK house prices have risen by 0.2% month-on-month, bringing the annual change to 3.9%. This represents record levels just beating the previous high set towards the end of the pandemic’s race for space. Despite the increase, this latest data shows how Budget uncertainty eased the year-on-year price growth, which had been 4.6% in September, as buyers and sellers braced for potential changes that could derail their plans.
“Following the Budget, the government’s new 5% stamp duty surcharge on second homes marks a bold move to curb demand from buy-to-let investors and second-home buyers. The policy aims to make primary homeownership more accessible, especially in popular areas where house prices have surged due to demand for rental and holiday properties. However, with buy-to-let investors potentially being priced out, rental supply may tighten further, especially in already-competitive urban areas, adding fuel to the rental price surge.
“First-time buyers also face a narrowing window of opportunity due to changes announced last week. The government confirmed the current stamp duty threshold of £425,000 will drop back to £300,000 in March 2025. This looming deadline could spur a rush to buy, adding to market activity in the months ahead as potential homeowners look to beat the cut-off. Yet, with mortgage rates still elevated, affordability remains a challenge for many would-be buyers.
“With so many moving parts in today’s housing market, from policy shifts to evolving mortgage rates, now is an essential time for homebuyers and investors alike to look to get mortgage advice to ensure they are getting the best possible deal for their circumstances.”
