by House prices in Britain are growing at the fastest annual pace for almost two years as borrowing costs continue to fall on expectations that the Bank of England will continue to cut interest rates, Nationwide said.
The building society said prices rose 3.2% in September compared to the same month last year, well above the 2.4% annual growth recorded in August, and the fastest pace since the 4.4% recorded in November 2022 was recorded.
The average house price in the UK was £266,094 in September – up 0.7% month-on-month from August and just 2% below the all-time highs recorded in summer 2022.
Robert Gardner, Nationwide’s chief economist, said: “Income growth has continued to outpace house price growth in recent months, while borrowing costs have fallen, amid expectations that the Bank of England will continue to cut interest rates in coming quarters.
“These trends have helped improve affordability for potential buyers and have supported modest increases in activity and home prices, although both remain subdued by historical standards.”
Lenders have been cutting rates on new mortgage deals in recent months due to the prospect of further cuts in borrowing costs after the Bank of England cut its base rate from 5.25% to 5% in August, the first cut since March 2020.
In its latest review, the BoE kept interest rates at 5% and said that while rates were on a downward trend, it needed more evidence they would remain low before further cuts could take place.
Lenders such as Nationwide, Halifax and HSBC are now offering five-year fixed interest rates below 4% to buyers for the first time since the start of the year.
Banks have also increased lending to borrowers in the past month, with Nationwide announcing last week that it would offer starter loans at six times annual household income. Lloyds and Halifax recently increased their borrowing limits to 5.5 times household income.
The Nationwide figures, which also recorded performance for the third quarter of the year, showed that house price growth in the north of England was greater than that in the south over the period.
The average house price over the three months to September 2024 increased by 3.1% year-on-year in the north of England, compared to 1.3% in the south.
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Northern Ireland recorded the biggest increase over the period, with house prices rising 8.6%, while Scotland saw a rise of 4.3%. Wales recorded an increase of 2.5%.
Terraced houses continued to show the biggest annual price increases, with average costs rising 3.5% in September. The average price for an apartment increased by 2.7%.
Gardner said: “However, looking at the longer term, detached homes still have a slight lead over other home types, most likely due to the ‘race for space’ during the pandemic.
“Since the first quarter of 2020, the price of an average detached house has increased by almost 26%, while the price of apartments has only increased by 15% in the same period.”
