House costs attain new file excessive after surpassing pandemic peak
- Average price has exceeded the previous record set in June 2022 says Halifax
House prices have hit a new high, according to Halifax, surpassing the previous peak set in June 2022 during the pandemic property boom.
The price of the average home rose for the fourth month in a row in October, according to the bank, which bases its figures on its own mortgage applications.
The typical property edged up by 0.2 per cent over the month, while year-on-year prices rose by 3.9 per cent.
It means the average property price has reached a record high of £293,999, surpassing the previous peak of £293,507.
New heights: According to Halifax, the average home is now worth almost £294,000
Amanda Bryden, head of mortgages at Halifax said: ‘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 per cent increase overall.
‘That’s a significant slowdown compared to the 21 per cent rise we saw in the equivalent period from January 2020 to the summer of 2022.
Why have house prices risen?
Lower rates and a more stable mortgage market have helped encourage more people to buy homes this year.
Although mortgage rates edged up during the first half of this year, they have since fallen back. Most borrowers can now secure a two-year or five year fixed rate mortgage of between 4 per cent and 5 per cent. Some can even get below 4 per cent if they have a big enough deposit.
Average mortgage rates are now over 160 basis points lower than in summer 2023. Meanwhile household incomes have been rising.
The number of new mortgages agreed recently reached its highest level in two years, according to Bank of England data.
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However, interest rates have been edging slightly upwards in recent weeks, with a number of major lenders readjusting home loan prices in response to changing market forecasts about interest rate cuts in the future.
Amanda Bryden of Halifax, suggests we are only likely to only see small house price growth over the coming months.
‘Looking ahead, borrowing constraints remain a challenge for many buyers, added Bryden.
‘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.’
Tom Bill, head of UK residential research at property firm Knight Frank thinks higher mortgage rates could potentially drag prices lower again.
‘The interest rate landscape has become more adverse than a fortnight ago, which will increase downwards pressure on house prices in the short-term.
‘For now, anyone deciding whether to fix for two or five years must consider whether they think Labour’s revenue-raising plans will work or more rate turbulence lies ahead during this Parliament’
Where are house prices rising the most?
Northern Ireland continues to record the strongest property price growth of any region, rising by a staggering 10.2 per cent since last October. The average price of a home in Northern Ireland is now £204,242.
House prices in Wales also recorded strong growth, up 5.6 per cent, compared to the previous year, with properties now costing an average of £225,543.
Once again Scotland saw a more modest rise in house prices. A typical property now costs £206,480, which is 1.9 per cent more than the year before.
The North West remains the region of England with the strongest growth, up by 5.9 per cent over the last year, to sit at £235,587.
House prices in Yorkshire and Humber are up 5.3 per cent on average year-on-year.
Meanwhile house prices in the Midlands have performed strongly. The typical home in the East Midlands is up 4.4 per cent year-on-year. In the West Midlands prices are up 4.7 per cent year-on-year.
London continues to have the most expensive property prices of any region, now averaging £543,308. Prices in the capital are up 3.5 per cent compared to last year.
