According to Halifax, UK house prices rose in September at the fastest annual pace since November 2022, driven by expectations of lower borrowing costs. Annual prices increased by 4.7%, and monthly growth remained steady at 0.3%. Experts note improved mortgage affordability due to wage growth and falling interest rates. Meanwhile, the Labour government aims to reform planning systems to boost housing supply, but a persistent shortage may continue to elevate prices.
According to data from mortgage lender Halifax, British house prices surged in September, marking the fastest annual growth since November 2022, as expectations of further reductions in borrowing costs fueled momentum in the property market. Halifax's report released on Monday indicated that annual property prices increased by 4.7%, up from 4.3% in August, although it fell short of the anticipated 5.2% rise. On a monthly basis, house prices rose by 0.3% in September, maintaining the same rate of increase observed in August.
A Reuters poll of economists had largely anticipated a monthly increase of 0.4%. Amanda Bryden, the head of mortgages at Halifax, noted that mortgage affordability has been improving due to robust wage growth and declining interest rates, which has enhanced confidence among potential buyers. She added that while the improved affordability should continue to encourage buyer activity, especially with expected further cuts to interest rates, housing costs still pose a challenge for many.
Other indicators of the UK property market have also indicated a rise in momentum. Last week, competing mortgage lender Nationwide reported the fastest annual house price growth since November 2022 for the month of September. Most economists surveyed by Reuters believe that the Bank of England will lower interest rates at its next meeting in November, following a decision to maintain borrowing costs at 5% last month.
The Labour government led by British Prime Minister Keir Starmer, which secured a decisive victory in the July elections, has committed to overhauling the planning system to facilitate increased construction. Additionally, it has established mandatory targets aimed at accelerating house-building. However, the ongoing shortage of housing supply is expected to continue contributing to rising prices in the medium term.
Despite government efforts to increase housing supply, the UK faces a continuing challenge of rising property prices amid improved buyer confidence and mortgage affordability.
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