House prices continued to rise modestly in the third quarter, extending a run of growth this year despite slower momentum, according to new analysis from Benham and Reeves.
The estate agent’s latest Property Market Index Review shows that average UK house prices increased by 0.2% in the third quarter to £306,283.
Although this marked a softer pace of growth than the 0.8% rise recorded in the first quarter and the 0.7% increase seen in the second, prices remain 1.7% higher than a year ago.
The composite index, which draws on data from Halifax, Nationwide, Rightmove and the UK House Price Index, suggests that the market continues to show resilience, with signs that the gap between what buyers can afford and what sellers are asking is beginning to narrow.
PRAGMATIC APPROACH
Benham and Reeves said that sellers have adopted a more pragmatic approach to pricing in response to prevailing market conditions, helping to ease friction and support completed transactions.
Across the UK, the gap between average mortgage-approved prices and asking prices fell to 30.2% in the third quarter, down from 33.1% in the previous period.
Average mortgage approvals stood at £284,911, compared with average asking prices of £370,986, with the improvement driven largely by lower asking prices.
Market conditions were weaker in London. The average house price in the capital declined by 1.6% quarter on quarter to £584,794, marking the first quarterly fall since the end of 2024.
On an annual basis, however, prices in London were down by just 0.4%, pointing to a degree of stability. The gap between mortgage-approved prices and asking prices in the capital narrowed to 28%, again reflecting more realistic seller expectations.
FIRMER OUTCOMES
The difference between asking prices and achieved sale prices has also continued to close. Across the UK, the average sold price in the third quarter was £271,898, equating to a 26.7% discount to asking prices. This represents the smallest gap recorded by Benham and Reeves since the index was launched in 2017.
In London, the discount narrowed to 17%, the tightest level since early 2023. The findings indicate that while price growth has slowed, improved alignment between buyers and sellers is helping to underpin market activity and deliver firmer outcomes for completed transactions.
POSITIVE MOVEMENT
Marc von Grundherr, director of Benham and Reeves, said: “The UK property market continued to post positive movement during the third quarter, however, the quarterly rate of house price growth slowed considerably when compared to the first half of the year.
“This was largely down to a heightened degree of market uncertainty, which we now know persisted right up until the Autumn Budget, however the long-term picture is one of annual growth which demonstrates just how resilient the UK property market is.
“The good news is that the market gap between buyer and seller has closed and this has been largely down to sellers entering the market at a more realistic asking price point.
“And whilst the market has certainly been quieter, those who did manage to secure a sale continued to achieve stronger market values, with sold prices continuing to climb over the course of the year.”
SENTIMENT SHIFT
He added: “Of course, as is often the case, the London market has been impacted to a greater extent by this shift in sentiment. While UK house prices increased by 0.2% in Q3 compared to Q2, values across the capital fell by 1.6% over the same period – although the positive to take is that annually the market remained largely unchanged.
“That said, London has historically been quicker to react to changing market conditions, both on the way up and on the way down.
“As a result, periods of short-term correction in the capital often reflect a market adjusting ahead of the wider UK, rather than any fundamental weakness.
“With pricing expectations now far more closely aligned and confidence beginning to return post-Budget, London is well placed to stabilise and regain momentum as the market moves forward.”
