The August Halifax House Price Index has uncovered which regions in the UK are experiencing significant growth in house prices, along with the average property prices in various areas across the nation.
The Halifax House Price Index for August, released on Friday, reported a year-on-year increase of 4.3%. This marks the most substantial rise since November 2022 and surpasses the 2.4% growth recorded in July, slightly above analysts’ expectations of 4.2%. However, it’s important to note that this increase partially stems from the lower house prices seen the previous year, making the current rebound more pronounced.
As of August, the average property price reached £292,505, the highest figure since August 2022, and a slight increase from July’s £291,585. Month-on-month, house prices rose by 0.3% in August, down from the 0.9% jump in July, yet still exceeding market predictions of 0.2%.
Northern Ireland witnessed the most significant growth in property prices across the UK, boasting a remarkable year-on-year increase of 9.8% in August. In contrast, Wales saw a 5.5% rise, while Scotland had more modest growth of 1.7%. London’s housing market recorded a slight uptick of 1.5% in prices.
In August, the average property price in Wales was £224,433, whereas Northern Ireland properties were priced at approximately £201,043. Scottish homes averaged £205,144, while properties in London remained the most expensive at £536,056.
Amanda Bryden, Halifax’s head of mortgages, stated, “Recent price rises are a continuation of a generally positive summer for the UK housing market. Homebuyers are regaining confidence due to easing interest rates. This optimism is reflected in the latest mortgage approval figures, which are now at their highest in nearly two years.”
“The resilience of house prices has brought the average property price within just £1,000 of the all-time high set in June 2022 (£293,507). This is great news for homeowners; however, affordability remains a pressing issue for many first-time buyers adjusting to higher mortgage rates.”
“With market activity on the rise and potential further interest rate cuts on the horizon, we anticipate continued modest growth in house prices throughout the remainder of the year.”
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, commented, “The strong demand for properties is being complemented by an increase in listings, as sellers who previously held back in anticipation of better market conditions are now entering the market.”
“Provided the economy continues to recover, with robust growth recorded in the first half of the year and inflation falling to manageable levels, we expect housing market activity to strengthen as affordability improves. However, an anticipated rise in inflation in the coming months due to increasing energy prices or a slowdown in interest rate cuts could pose challenges.”
The Impact of Upcoming Bank of England Rate Decisions on the Housing Market
The next interest rate decision from the Bank of England (BoE) is scheduled for September 19. In August, the BoE decided to reduce interest rates by 0.25%, bringing them down to 5%, with a close vote of 5-4 within the Monetary Policy Committee (MPC).
The direction of these interest rates is critical for the housing market. Higher rates typically lead to decreased borrowing due to rising mortgage costs, potentially creating a sluggish market. Conversely, falling interest rates can stimulate the housing market by making borrowing more affordable for individuals and businesses.
Although the Bank of England has adopted a more hawkish approach compared to central banks like the US Federal Reserve, it is anticipated to implement at least one more rate cut by the end of this year, potentially bolstering growth within the UK housing market.
Haine emphasized, “The housing market is in a healthier position compared to just over a year ago when mortgage rates were alarmingly high. All eyes will be on the next interest rate decision later this month. Fortunately, many major lenders are already beginning to lower their competitive rates.”
“While another UK rate decision is expected before the year’s end – although possibly not as soon as this month – any reduction could improve mortgage rates for new borrowers and those on tracker rates. Nonetheless, this won’t alleviate concerns for those tied into long-term fixed-rate deals who will face escalated repayments when their terms come to an end.”
Photo credit & article inspired by: Euronews
