House prices in the UK rose by 0.3% in September, bringing the annual growth rate to 4.7%—the fastest increase since November 2022. With the average home now priced at £293,399, up by £859 in a month, the market continues to recover after last year’s slump. However, the road ahead may still be steep as rising property prices and a surge in seller activity weigh on the market’s momentum.
A slow climb back to the peak
The property market is gradually recovering from the heights it reached in June 2022, following the post-pandemic boom. Sarah Coles, head of personal finance at Hargreaves Lansdown, explains: “The property market continues its relentless trudge back to the summit it scaled at the peak of the post-pandemic boom in June 2022. One last push could take it to new heights next month, but it’s carrying the increasingly heavy baggage of pricier properties and more sellers.”
Mortgage rates have eased, sparking renewed buyer activity, and the average two-year fixed rate mortgage has fallen from 5.54% in August to 5.38% in September. Mortgage approvals also hit a two-year high in August. Yet, as Coles notes, “the market is likely to struggle under the increasing weight of pricier properties,” especially as affordability remains a challenge for many buyers.
Sellers flood the market
The fear of potential tax changes in the upcoming Autumn Budget has driven more sellers to the market. Zoopla’s figures show that the number of homes for sale has risen by 12%, with 13% of these properties previously rented out. Coastal and rural homes, often owned as holiday properties, have also seen a surge in listings.
This influx of properties for sale could limit further price growth, which might be good news for first-time buyers. However, as Coles points out, first-time buyers are still facing rising property prices, with the average cost of a first-time buyer property increasing by 4.2% in the last year. For those struggling to save for a deposit, schemes like the Lifetime ISA can provide crucial support.
Optimism from industry leaders
Guy Gittins, CEO of Foxtons, echoes the optimism about the market’s recovery: “We have certainly seen buyer confidence returning to the market, with new buyer numbers being well up along with viewings. Currently, at Foxtons, our pipeline of agreed sales is sitting at the highest level since before the referendum in 2016.”
However, Gittins is concerned about the potential removal of stamp duty relief for first-time buyers next year: “I think it will be really sad if that does happen… If the government does reduce the stamp duty threshold, it will only make affordability harder.”
Market outlook and future growth
The steady rise in house prices and demand signals resilience in the property market. Daniel Austin, CEO and co-founder of ASK Partners, adds: “We are continuing to see a consistent month-on-month rise in house prices, which signals a potential upward trend for the remainder of the year. The market is showing strong signs of resilience, even amid broader uncertainties.”
Much anticipation surrounds Labour’s plans to stimulate the housing sector, particularly with a focus on building new homes and unlocking the planning system. If successful, these initiatives could further boost market growth and investor confidence in the property sector.
Halifax has published its house price index for September: september-2024-halifax-house-price-index.pdf
