UK house prices see fastest growth in nearly 2 years

By Aysu Bicer

LONDON (AA) - House prices in the UK have risen at their fastest pace in almost two years, driven by falling mortgage rates and improved affordability, according to Nationwide, one of the UK's largest mortgage lenders, on Monday.

The average UK house price rose by 3.2% in the year to September, marking the quickest annual increase since November 2022.

On a monthly basis, prices jumped 0.7%, reversing a 0.2% decline in August.

This increase brought the average property price to £266,094 ($357,000), up from £265,375 the previous month.

The rebound in house prices appears to be partly linked to a recent fall in mortgage rates, following the Bank of England’s decision to start cutting the Bank Rate in August.

Regionally, Northern Ireland recorded the strongest price growth, with property prices rising 8.6% year-on-year in the last quarter.

In contrast, East Anglia was the weakest-performing region, with prices dropping by 0.8% over the same period.

Commenting on the data, Robert Gardner, Nationwide’s chief economist said: "UK house prices increased by 0.7% in September, after taking account of seasonal effects. This resulted in the annual rate of growth rising from 2.4% in August to 3.2% in September, the fastest pace since November 2022 (4.4%).

“Average prices are now around 2% below the all-time highs recorded in summer 2022."

He said that income growth has outpaced house price increases in recent months, while borrowing costs have edged lower.

"These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historical standards," Gardner added.