Fiona Nanna, ForeMedia News

6 minutes read. Updated 1:59AM GMT Mon, 9 September, 2024

The UK housing market experienced a significant surge this August, as the Halifax House Price Index revealed the strongest annual growth in two years. According to data from Halifax and the Bank of Scotland, house prices in the UK climbed by 4.3% year-on-year, marking the highest increase since November 2022. This jump in prices was notably higher than July’s 2.4% and surpassed analyst predictions of 4.2%.

This sharp growth can partly be attributed to weaker property prices seen in 2022, making the recent rise even more pronounced. The typical UK home now costs £292,505, slightly up from July’s £291,585 and the highest figure since August 2022. Despite a month-on-month increase of 0.3% in August, down from 0.9% in July, it still exceeded market expectations of 0.2%.

Regional Differences: Northern Ireland Leads, London Lags

While UK house prices overall show upward momentum, the growth varies by region. Northern Ireland saw the strongest surge, with property prices increasing by a substantial 9.8% year-on-year. Wales followed with a 5.5% rise, while Scotland and London reported more modest increases of 1.7% and 1.5%, respectively.

  • In Wales, the average property now costs £224,433.
  • Northern Ireland homes average £201,043.
  • Scotland’s housing market shows an average price of £205,144.
  • London, the UK’s most expensive housing market, reports an average property price of £536,056.

These figures suggest that despite the overall market improvement, regional discrepancies remain significant, with Northern Ireland and Wales showing far stronger growth compared to other parts of the country.

Positive Outlook for the UK Housing Market

According to Amanda Bryden, head of mortgages at Halifax, the recent price hikes are reflective of a “largely positive summer” for the UK housing market. Easing interest rates have improved prospective homebuyers’ confidence, leading to an increase in mortgage approvals, which are now at their highest in nearly two years.

Bryden added: “The average property price is now just £1,000 below the record high set in June 2022, a significant milestone for homeowners. However, for first-time buyers, higher mortgage costs remain a challenge.” With further potential interest rate reductions on the horizon, the market is likely to experience modest growth throughout the rest of 2024.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, echoed this optimism, noting that “strong demand for properties is being matched by a surge in listings as sellers, previously hesitant, are now more willing to enter the market.” Haine stressed that if economic recovery continues as expected, along with falling inflation, housing market activity should strengthen further.

Bank of England’s Role in Shaping the Future of the Market

The next major event for the UK housing market is the Bank of England’s interest rate decision, scheduled for 19 September. In August, the BoE cut rates by 0.25% to 5%, with the Monetary Policy Committee’s decision split 5-4 in favour of the reduction. The BoE’s future actions will play a pivotal role in determining whether house prices continue to rise or face potential slowdowns due to higher mortgage rates.

Falling interest rates generally encourage more borrowing, thereby boosting the housing market. On the flip side, higher rates tend to suppress activity, as mortgage costs rise and affordability becomes a concern for buyers. Many experts believe the BoE will implement at least one more rate cut before the end of 2024, potentially supporting further market growth.

Alice Haine further emphasized that “many major lenders have already started trimming their mortgage deals in anticipation of more favorable rate cuts.” However, she warned that borrowers on fixed-rate deals taken out during the BoE’s rate-hiking cycle might still face challenges when it comes to refinancing.

Meta Description: UK house prices hit a two-year high after a positive summer, with the Halifax House Price Index showing strong growth across the country. Find out how regions like Northern Ireland and Wales performed.