House costs are nonetheless rising however the tempo of development is cooling

Average property prices continued to rise in the year to August, but the pace of growth cooled, new data from the Office for National Statistics revealed. 

Meanwhile, private rents have continued to climb at a ‘near-record rate’.  

Average property prices increased by 2.2 per cent to £290,000 in the period, down from 2.7 per cent growth in the 12 months to June. 

It means the typical home has added £8,000 of value since January 2024, and now sits £5,000 off the record high recorded in June 2022. 

Amid lower mortgage rates, average house prices increased by 1.6 per cent in England to £306,000, 2 per cent to £218,000 in Wales and 6 per cent to £199,000 in Scotland. 

In Northern Ireland, the average house price was £185,000 between April and June, which was 6.4 per cent higher than a year ago, the ONS said. 

In London, average property prices fell by 0.4 per cent. 

The North East was the English region with the highest house price inflation in the 12 months to July, at 3.8 per cent. 

Across all property types, semi-detached houses saw the biggest jump in the period, rising by 2.2 per cent to an average of £296,000, according to HM Land Registry. 

In contrast, average prices for flats and maisonettes edged up just 0.4 per cent to £252,000. 

Andrew Montlake, managing director of Coreco, told Newspage:’It wasn’t so long ago that some were declaring double-digit price falls for the residential property market. 

‘That simply hasn’t happened and was never going to happen. 

‘Prices have held their own and, with mortgage rates continuing to drop, increased demand is likely to send prices higher in the closing stages of 2024. 

‘Yes, there are potential road bumps ahead, not least the Autumn Budget, but another base rate cut before the year is out is possible, although it is unlikely to come this week following inflation staying at its current level. Falling mortgage rates are definitely driving demand on the ground.’

Richard Harrison, head of mortgages at Atom Bank, said: ‘There is clear momentum building in the housing market currently. 

‘The first base rate cut in four years has helped spark activity and a bit of competition among lenders, bringing back prospective buyers who might have put deals on hold.

‘Lower mortgage rates are undoubtedly playing a part here, and while another base rate cut this week looks unlikely, the markets seem to expect another cut before the end of the year, spelling more good news for potential buyers.’ 

Average interest rates for two and five year fixed-rates have fallen for two straight months, according to data from Moneyfacts. 

David Hollingworth, associate director at L&C Mortgages, said: ‘The level of competition between lenders remains intense and they’ve continued to reprice regularly to try and keep up with peers.’

Nick Leeming, chairman of Jackson-Stops, said: ‘Buyers’ confidence will always, to varying extents, be influenced by the wider economic picture. 

‘It is essential the Government introduces polices to address the supply and demand imbalance, but at a rational rate. 

‘The market needs consistency and certainty, not knee-jerk reactions and short-term solutions.’

Rental costs increasing     

In August, the average private rent was £1,286 per month – £100 or 8.4 per cent more than the previous year, the ONS says. 

The 8.4 per cent increase was down from 8.6 per cent in the year to July and below the record-high annual rise of 9.2 per cent in March 2024. 

Average monthly rental costs for England reached £1,327 in August, up £104 from a year earlier. 

In Wales, average monthly rental costs came in at £752 in August, up 8.5 per cent or  £59 from a year earlier. 

Meanwhile, in Scotland, people’s average monthly rent was £969 in August, up 7.6 per cent or £68 from a year earlier.

Ben Twomey, chief executive of Generation Rent, said: ‘Prices in the shops may have stopped rising so quickly, but renters are still seeing our single biggest cost go up faster than our incomes. 

‘This isn’t news to renters, who have been feeling this squeeze for a very long time as our landlords snatch away more and more of our wages.’

The report was released as separate ONS figures on Wednesday showed that inflation remained unchanged at 2.2 per cent last month, marking the second month in a row that it has remained above its target 2 per cent level.

Some experts claim the figures reinforce expectations that the Bank of England will hold the base rate at 5 per cent on Thursday.