House prices in the UK rose by 3.2% in September compared with a year ago, the fastest rate of growth in nearly two years, according to Nationwide.
The building society reported that annual growth was the highest since November 2022, with terraced houses driving the increase. Nationwide credited rising incomes and reductions in mortgage rates for improving affordability. Separate figures from the Bank of England also showed mortgage approvals at their highest level in two years.
The average UK house price in September stood at £266,094, Nationwide said.
Based on its mortgage lending data, the building society revealed that prices increased by 0.7% in September compared to August, which had recorded a slight decline.
“Income growth has outpaced house price growth in recent months, while borrowing costs have edged lower amid expectations that the Bank of England will continue reducing interest rates in the coming quarters,” said Robert Gardner, Nationwide’s chief economist.
“These trends have helped improve affordability for potential buyers,” he added. However, he noted that while the housing market and prices had picked up, they remained subdued compared to historical standards.
Amy Reynolds, head of sales at estate agency Antony Roberts, commented: “While sellers may feel encouraged by these price rises, if a property is priced too high, buyers are unlikely to view it. The best advice we can give is to adjust the price to match the market.”
Increased Mortgage Competition
In recent months, mortgage competition between lenders has intensified. Brokers say that lenders have been offering the best deals to new buyers rather than those remortgaging.
Nationwide, the UK’s largest building society, recently introduced a new option allowing borrowers to secure a mortgage of up to six times their income with a 5% deposit, available on five- or ten-year fixed-rate deals. Other lenders have also lowered their interest rates.
However, the cost of deposits and monthly repayments remain significant barriers for first-time buyers. Although house prices have been relatively stagnant over the past year, many experts believe that falling interest rates could lead to renewed buyer interest.
In a further sign of increased activity, figures from the Bank of England showed that 64,900 mortgages for house purchases were approved in August, up from 62,500 in July. This was the highest level since August 2022 and more than analysts had anticipated.
Source: Nationwide Building Society