UK house prices increased by 3.2% in September compared to the same period of the previous year, reports Nationwide, stating it was the highest yearly growth rate since November 2022, largely driven by terraced homes. The growth rate in prices has been attributed to rising incomes and cheaper mortgage rates, with the average price of a UK property standing at £266,094 in September. The data, based on the building society’s own mortgage lending, showed that September prices had risen by 0.7% compared to the previous month whereas August recorded a slight fall on the monthly measure. Nationwide’s chief economist, Robert Gardner suggests that the growing income rates have outstripped the rate of house price growth, resulting in improved affordability for potential buyers. In addition, borrowing cost reductions are helping to ease affordability concerns amongst property seekers.
However, Gardner maintains a note of caution by observing that despite the recent rise in activity in the housing market and prices, they still “remain subdued compared with historical standards”. Estate agents are advising sellers to price their properties realistically, otherwise there is a chance that buyers would not be interested in viewing the property, regardless of the recent hikes.
As the residential mortgage market is becoming increasingly competitive, many lenders are offering better deals to those purchasing newly-built properties, rather than those who are remortgaging. The UK’s largest building society, Nationwide, recently announced that new borrowers could request a mortgage of up to six times their total income with a 5% deposit if taking out a five or ten-year fixed-rate deal. Other lenders have since lowered their interest rates; however, the prospect of covering the cost of monthly mortgage repayments alongside the mortgage deposit can still present a significant barrier to first-time buyers.
Figures from the Bank of England indicate that the number of approved mortgages for newly acquired homes has risen, with 64,900 approved mortgages in August, up from 62,500 in July. Many forecasters suggest that demand from buyers could rise with interest rates expected to fall in the coming months. While terraced homes experienced an uplift of 3.5% compared to detached homes, which experienced a 1.7% rise, larger homes saw a significant increase in price during the pandemic. Nationwide’s survey only reflects prices for buyers who have mortgaged their property, not accounting for people who have purchased homes on a cash basis or buy-to-let deals. A third of all home sales are conducted by cash buyers. The Halifax will soon be publishing its house price index for September
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