House Prices Rise To The Highest Level For Two Years

House prices rose 0.7% in September, according to Nationwide, the mortgage lender, which is their fastest pace in two years. This means that house prices are, on average, 3.2% higher than they were this time last year.

Potential buyers have been attracted by the Bank of England’s 0.25% cut in interest rates over the summer, with pundits predicting further reductions soon.

Economists have said that the month-on-month rise seen in September suggested August’s fall of 0.2% was just a ‘blip’ and that house prices are being supported by the recent falls in interest rates.

The average price of a British house is now £266,094, according to Nationwide, just short of the record high reached in summer 2022, before Liz Truss issued her mini-budget which caused borrowing costs to spiral and stymied the housing market.

Nationwide’s chief economist, Robert Gardner, said “Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”

Prices in the south-east and south-west of England rose much more slowly than in the north-west and Yorkshire. Northern Ireland has seen rises of over 8% over the past year.

Detached homes are said to have increased in value by 1.7% over the past year, compared with 2.7% for flats, 3.5% for terraced houses and 2.8% for semi-detached houses.

The number of new mortgage approvals has risen to the highest level since the Truss-Kwarteng mini-budget. In August, almost 65,000 mortgages were approved, according to the Bank of England, which was a 3.8% increase on July, and 43% up from August 2023.