By The Halifax Price Index for August has been released, it can be seen here and in summary:
The UK housing market has seen a steady rise in house prices, with a 0.3% increase in August, following a 0.9% increase in July. This brought the average property price to £292,505, the highest since August 2022. On an annual basis, house prices have risen by 4.3%, the strongest growth rate since November 2022. This is largely due to a base effect, as prices were weaker a year ago.
Regional differences show that Northern Ireland led with the highest annual growth at 9.8%, followed by Wales at 5.5%. Scotland saw a more modest 1.7% rise, and the North West of England recorded a 4.0% growth rate. London remains the most expensive region, with average property prices of £536,056, up 1.5% annually.
The increase in house prices is supported by improved market activity, partly due to easing interest rates, which have boosted confidence among prospective homebuyers. Mortgage approvals also reached their highest level in almost two years, reflecting the stronger demand in the market.
Despite the growth, affordability remains a challenge for many buyers, especially as they adjust to higher mortgage costs. However, with the possibility of further interest rate reductions, the housing market is expected to see modest growth for the remainder of 2024.
UK home sales slightly declined in July 2024, but the quarterly data shows a 5.1% rise, indicating resilience in the housing market. Mortgage approvals in July increased by 2.3% compared to the previous month and were 26.5% higher than in July 2023. Overall, market trends indicate a stable but positive outlook for the UK housing market heading into 2024.
Industry comments:
Tom Brown, Managing Director, Real Estate at Ingenious, said: “Today’s data shows that the resilience and appeal of the UK property sector persist. Though we have seen higher inflation and sticky borrowing rates, we welcome the BoE’s recent rate cut and what will hopefully be the start of the much needed falling rate cycle.
“There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors. This is a trend that is not going away. However, it’s crucial to recognise that the situation isn’t consistent nationwide or across different property pricing brackets. It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading. In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale Buy-to-let investors.
“At Ingenious, we continue to work closely with borrowers and investors, adapting to the dynamic market landscape and broader economic shifts, including those related to the climate crisis and changing lifestyles. We are expanding the reach of our development lending product to provide extended stabilisation terms for specialised developers in the rental sector. Furthermore, we’re introducing special lending terms for developers focused on reducing embedded carbon in their construction practices.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The market breathed a collective sigh of relief when first the election result ended lingering political uncertainty and again when interest rates started to fall.
“That added comfort is reflected in this solid, not spectacular, price growth figures from the country’s largest lender and reinforced by recent encouraging mortgage approval numbers.
“These show buyers and sellers did not panic but continued about their business over the summer. However, mortgages are still relatively expensive for many and talk of ‘a painful Budget’ by next Halloween is spooking many into holding off a little longer or at least negotiating harder to avoid what they regard as overpaying.”
Tomer Aboody, director of specialist lender MT Finance, says: “With a further positive uptick in house prices compared with last year, this demonstrates the confidence among buyers who are taking advantage of lower mortgage rates.
“With the prospect of a further rate cut from the Bank of England in the offing, we are hoping to see higher transaction volumes in the final quarter of the year, although a potentially tough Budget in October could deflate the bubble or at the very least, limit that budding confidence.”
Liz Edwards, money expert at personal finance site finder.com :
“Today’s figures indicate that the UK property market is continuing on its road to recovery. Last week, data from the Bank of England revealed that mortgage approvals have risen to the highest level since the mini-Budget in September 2022. As well as this, many are confident that there will be further cuts to the base rate before the end of the year, which should help stimulate the housing market even further. In fact, when we recently surveyed a panel of experts, 80% predicted that there will be at least one more base rate cut before the end of 2024.
“There’s a chance that the upcoming October Budget could dampen buyer confidence slightly, as we wait to see what the new government has in store for our finances, but I think that any stall in the market is likely to be temporary.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The mortgage environment remains volatile, with lenders pulling deals and repricing at short notice. However, unlike a few months ago, the difference now is that mortgage rates are falling rather than rising, which is good news for affordability. Mortgage rates are at their lowest levels since March, with lenders continuing to reduce rates even though Swaps have plateaued.
“The biggest lenders are keen to attract new business, which is why we are seeing this frequent repricing downwards. Five-year fixes have now dipped below 3.8 per cent, initially for purchases and now for remortgages too. Furthermore, we are starting to see shorter-term products, such as three-year fixes, also edge below 4 per cent.
“How quickly or how far pricing will continue to fall by is a little more open to debate. For a significant period of time, the ‘normal’ rate environment has been between 1.5 and 2.5 per cent. However, borrowers coming off such products will find they are moving onto higher rates, although these are not as expensive as they would have been three months ago.
“As rates have fallen, we have seen activity noticeably increase. Estate agents report that August was busy as motivated movers who may have delayed for a while have got on with their transactions, while we have seen people take advantage of more palatable rates.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “One small reduction in interest rates has translated into an instant response from the housing market during what is usually one of the quietest months of the year.
“In our offices, we have agreed a large number of sales in all price ranges as sellers were encouraged to reduce their pricing or seize the day and launch there and then, rather than wait for September.
“The markets are pricing in another rate cut in November, taking base rate to 4.75 per cent, but that is very late in the day to wait to launch a property as most people want to move by Christmas. September or October would be a better option, ensuring the price is as accurate as possible to enable a successful and timely sale.”
Daniel Austin, CEO and co-founder at ASK Partners, said: “We are continuing to see a month-on-month rise in house prices, which is hopefully the sign of an upward trend developing for the rest of the year. The market certainly appears to be showing signs of resilience. Everyone is waiting in anticipation of what the new government will do to drive construction of new homes and unlock the planning system, and it is likely that initiatives announced in the coming months will give the market a further boost.
“In the property investment world, rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, we have seen values hit the bottom and confidence return. The market has picked up with opportunistic acquisitions of prime properties in prime locations.
“As a debt provider, we hope to support well-capitalised borrowers who understand their product and are looking at the best sites in prime locations with potential to add to their asset value. Following this strategy, we aim to bolster developers’ initiatives with the flexible underwriting approach that is necessary for navigating a changing market. This will enable us to continue to offer opportunities for the growing number of private individuals opting to invest in property debt.”
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