Halifax’s House Price Index for September reported a year-on-year rise in house prices of 4.7%, a two-year high.
Compared to August, house prices were up 0.3% in September (or £859), marking the third monthly rise in a row.
The typical property now costs £293,399, which is the highest level for two years and just off the record high of £293,507 set in June 2022.
The lender noted that the high annual growth figure also reflects weaker prices a year ago.
Amanda Bryden, head of mortgages at Halifax, said: “It’s essential to view these recent gains in context. While the typical property value has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months.
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“Looking back two years, prices have increased by just +0.4% (£1,202).
“Market conditions have steadily improved over the summer and into early autumn. Mortgage affordability has been easing thanks to strong wage growth and falling interest rates. This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.”
“Easing mortgage rates, strong wage growth and the prospect of further interest rates to come have energised the UK’s residential property market as buyer demand and new listings rapidly ramp up. Households that had parked moving decisions amid affordability concerns during the era of high inflation and high interest rates are now returning to the market in droves, with the number of agreed sales and buyer inquiries to estate agents surging by a quarter in recent weeks.”
Alice Haine, personal finance analyst at Bestinvest, added: “Provided inflation remains in check and interest rates continue to ease, housing market activity is expected to continue strengthening in line with easing affordability levels.
“Bank of England Governor Andrew Bailey raised hopes of better borrowing conditions last week when he suggested the central bank may get ‘aggressive’ on interest rates cuts, provided inflation remains under control. This raises the likelihood that the BoE will push ahead with a second rate cut at its next monetary policy meeting at the start of November and the possibility of a consecutive reduction in December.”
