According to the latest figures, last month, UK house prices hit their highest level in two years, with renewed optimism among buyers following a recent interest rate cut, according to the country’s largest mortgage provider, Halifax. The lender reported a 4.3% annual increase in property values in August which pushed the average home price to £292,505 across the country.
Owned by Lloyds Banking Group, Halifax credited the Bank of England’s interest rate reduction in early August—its first in four years—for boosting buyer confidence. However, while house prices are nearing the record high of £293,507 set in June 2022, interest rates, though reduced, remain raised at 5%, the highest since the financial crisis of 2008.
Halifax noted a 0.3% rise in prices in August, compared to a 0.9% increase in July. Another rate cut is expected from the Bank of England later this year, but the timing remains uncertain, with the next decision due later this month on Thursday, 19 September.
The data also showed regional disparities in house price growth. Northern Ireland led with a 9.8% year-on-year surge, bringing the average home price to £201,043. In England, the north west saw the sharpest rise, with a 4% increase pushing average prices to £232,917.
It’s worth pointing out that Halifax’s data only includes mortgage-based purchases, and it excludes cash buyers and buy-to-let transactions, which could make a big difference to the figures as these make up roughly a third of all home sales.
When commenting on the latest data, Halifax’s head of mortgages Amanda Bryden said: “While this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs.”
Ms Bryden added: “With market activity picking up and the possibility of further interest rate reductions to come, we expect house prices to continue their modest growth through the remainder of this year.”
