On an annual basis, UK house prices are up 3.8%, the fastest year-over-year pace in two-and-a-half years. Halifax’s report estimates this increase raised the average price to £298,237. Bizarrely, Northern Ireland led the way in terms of growth, with average prices rising 9.3% in the last year to £214,832. The housing market is red hot, positively bubbling over with scorching high demand. This increase in share has been propelled by declining mortgage rates and banks providing more accommodative affordability calculations.
Amanda Bryden, mortgages director at Halifax, underlined the positive effect these shifts have had on levels of housing market activity. She stated that the “housing market continues to show resilience, with activity levels holding up well,” and highlighted expectations for house prices to maintain a steady path of modest gains throughout the remainder of the year.
Scotland and Wales both posted solid annual gains in house price growth in July. Scotland saw a 4.7% jump, raising the average price to £215,238. At the other end of the spectrum, Wales recorded a 2.7% increase, with the average price reaching £227,928. It’s further evidence that a positive trend has taken shape on the UK housing market. This is against a backdrop of increasing difficulties, such as the ending of temporary stamp duty cuts in England and Northern Ireland in April.
According to Rightmove’s figures, the average two-year fixed mortgage rate for those buying with a 20% deposit has fallen to 4.4%. Last year, that number was 5.2%. Richard Donnell, executive director at Zoopla, wanted to sound a note of caution. He stressed that the recent rate cuts are unlikely to significantly lower mortgage costs for homebuyers.
“The price of fixed-rate mortgages already factors in the future path of base rates meaning average mortgage rates are likely to remain broadly where they are today.” – Richard Donnell
Despite potential fluctuations in the market, Bryden noted that many borrowers coming off two-year fixed rates are likely to see their monthly payments decrease. This change is particularly impactful for anyone who fixed rates at the peak after the 2022 mini-budget.
Bryden acknowledged that while most borrowers nearing the end of five-year fixed-rate deals may face increased repayments, the impact will vary among households.
“While most borrowers coming to the end of five-year fixed-rate mortgage deals will see their monthly repayments rise, the extent of this will vary across households.” – Amanda Bryden
Donnell tends to be modestly bullish on home prices. He’s hopeful that although we may not notice immediate impact, the market has the potential to change course if would-be home movers decide to put off their plans due to increased budget constraints.
“We’re unlikely to see a significant impact on house prices, but it may influence market dynamics if prospective home movers choose to delay plans as a result of tighter budgets.” – Richard Donnell