Falling mortgage rates have pushed house prices to a new all time high, new figures from leading lender Halifax reveal today.
The average price of a home in the UK advanced 0.2% in October, a fourth consecutive month of growth, and at an annual rate of 3.9%. That means the average property costs £293,999, passing the previous peak of £293,507 set in June 2022 shortly before Liz Truss’s mini-Budget.
The average London price rose 3.5% to £543,308, the highest since November 2022 when it was £545,568. The record high was £552,592 in August 2022
The new record was announced hours ahead of a second cut in interest rates from the Bank of England following a first move in August. Its headline rate was brought down from 5% to 4.75% today.
Amanda Bryden, Head of Mortgages, Halifax, said: “Average UK house prices nudged up 0.2% in October, continuing the positive momentum of recent months. This brought the annual growth rate to 3.9%, slightly lower than in September. The average property price has reached a record high of £293,999, surpassing the previous peak of £293,507 set in June 2022, towards the end of the pandemic-era ‘race for space’.
“That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place. Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years, recording a 0.2% increase overall.
That’s a significant slowdown compared to the 21% rise we saw in the equivalent period from January 2020 to the summer of 2022.
“Despite the affordability challenge, market activity has been improving. The number of new mortgages agreed recently reached its highest level in two years.
“This aligns with average mortgage rates dropping steadily since spring - now over 160 basis points lower than in summer 2023 – coupled with continued positive income growth. “Looking ahead, borrowing constraints remain a challenge for many buyers.
“Following the budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer. New policies like higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers might also affect demand.
“While we expect house prices to keep growing, it will likely be at a modest pace for the rest of this year and into next.”
Guy Gittins, CEO of London agents Foxtons, said: “A fourth consecutive month of positive growth demonstrates the current strength of the UK property market and now that the dust has settled on last week’s Autumn Budget, the outlook continues to be very positive.
“While homebuyers were understandably disappointed about the lack of a stamp duty relief extension last week, the vast majority have already factored this increased cost into their plans for 2025 and those currently looking to purchase still have time to complete before the deadline at the end of March next year.
“As a result, we can expect the heightened level of market activity seen this year to continue, with momentum strengthening as we head into 2025, further elevated by forecast interest rate reductions, the first of which could be seen as soon as today.”
Director of agents Benham and Reeves, Marc von Grundherr, said: “A degree of property market hesitation is always to be expected in the run up to a major economic event such as the Autumn Budget. Despite this, house prices have continued to climb, albeit at a slower rate, but this demonstrates the intent that is currently being shown on both the side of buyers and sellers in the current market.”
