In September, UK house prices fell on average by 0.3%. Potential buyers are adopting a watchful wait and see approach as they count the days to Rachel Reeves’ expected 26 November budget statement. Amanda Bryden, director of mortgages at Halifax, the biggest lender within Lloyds Banking Group, pointed to entrenched affordability issues. On the flip side, she noted that this is a pretty good environment for mortgage rates, which increases buyer confidence.
The average price of a perfect home dropped by 0.3% month-on-month (or £794) to stand at £298,184. This drop counteracted a 0.2% increase registered in August. UK house prices went up 1.3% over the year, even taking into account the recent dip. This relatively small growth represents the weakest year-over-year gain since April 2024.
Sarah Coles, head of personal finance at investment platform Hargreaves Lansdown, said the bitter mood in financial markets reflected the housing market at large.
“Buyer enthusiasm subsided again in September, bringing house prices down slightly from August’s record high. It’s not a catastrophic plunge, and prices are still fractionally up over the year. This isn’t a market that’s running off a cliff, it’s one that’s stuck in the mud.” – Sarah Coles
The typical two-year fixed-rate mortgage deal is still under 5% on average, with the average five-year fix just over this threshold. Bryden wanted to highlight how powerful these lower rates have been in improving buyer confidence. He added that strong wage growth is driving this support even higher.
“While affordability remains a challenge, a relatively lower mortgage rate environment and steady wage growth have helped support buyer confidence.” – Amanda Bryden
First-time buyers are greeted by a mixed bag of opportunities in the current market. The average price of properties sold to first-time buyers hit £236,811, an increase of 1.7% year-on-year. In fact, there are some signs that some areas provide more affordability for the new entrants to this housing market.
Guy Gittins, chief executive of real estate agents Foxtons, shared some perspective on the current state of the market.
“Market momentum remains steady and this underlying stability is encouraging buyers and sellers back into the fold, albeit with a degree of caution ahead of November’s budget.” – Guy Gittins
At the same time, the UK is approaching a significant budget milestone. The extended runway to the announcement will definitely rattle short-term consumer confidence across the entire housing market.
In short, what the current UK house prices indicate is a time of recalibration, with greater economic turmoil casting a shadow over the market. Analysts are still hopeful for continued modest growth as the year moves on, in spite of changing buyer sentiment and affordability issues.