The figures convey a positive image of the landscape of the property market, especially as house prices and property sales – two important metrics to gauge the health of the market – have increased over the past three months. It reflects the increased confidence being generated in the market, away from the pessimism which characterised much of late 2022 to early 2024.
Iain McKenzie, chief executive of the Guild of Property Professionals, commented that the property market is heading into an ‘awesome autumn.’ Indeed, the metrics are pointing towards a healthy property market this autumn.
Let’s take a closer look at these two key metrics and explore how these are directly shaping the property market. Such an exploration will highlight the key points to look out for over the coming months.
Rising House Prices
A common thread in the data is the growth of property prices across the country. According to the latest Halifax index, the average UK house price rose for the third consecutive month in a row in September, reaching an average increase of 0.3% per month.
Taking a broader look at the data, the annual price rose by 4.7%: the average UK property price in September 2023 was £291,000, whereas the present average price is £293,399. Amanda Bryden, head of mortgages at Halifax, described this as ‘just shy of the record high of £293,507 set in June 2022.’ This underscores that the UK property market is heading out of its recovery period following the economic fallout of the September 2022 mini-budget.
In terms of regional property price increases, the biggest was felt in Northern Ireland at 9.7% (£203,593). Other parts of the country also received healthy increases in property value: East of England at 2.3% (£333,042), North West England at 5.1% (£234,355), South East England at 2.9% (£387,637), and London at 2.6% (£539,238).
Alternatively, Zoopla calculated that the average UK house costs approximately £300 per square foot, with Kensington and Chelsea having the highest at £1,373 and Hartlepool having the lowest at £118.
All this data reveals two important features of the present property market. First, the market is recovering at a steady, respectable pace. Second, the economic and political climate is helping to drive growth in the property market thanks to the lowered interest rates, more incoming property supply, and increased wages.
These conditions enable property value to return to a period of growth, with Guy Gittins, chief executive of Foxtons, commenting that the ‘patience of UK home sellers is now being rewarded, as house prices are increasing consistently from one month to the next and at their fastest rate since 2002.’
Increased Market Interest
Market interest has also picked up in tandem with property value increases. The number of mortgages agreed has increased to over 40% this year, the highest level since July 2022. Karen Noye, mortgage expert at Quilter, observed that ‘some lenders offer deals around the 4% mark, a stark contrast to the 5% or higher rates seen in the immediate aftermath of the 2022 mini-budget and beyond.’
For this reason, the easing of mortgage affordability following the Bank of England reducing interest rates from 5.25% to 5.0% in August has played an essential role in facilitating consumer participation. Further unwinding of interest rates will enhance property acquisition, with some experts expecting a further reduction in November.
This positivity is also felt among the respondents who contributed towards the survey conducted by the Royal Institution of Chartered Surveyors, in which a net balance of 14 saw a rise in property demand over the fall of September. Furthermore, a net balance of 23 of the respondents expect sales to grow over the next three months. This opinion was even greater when looking at the next twelve months, for a net balance of 45 believed that sales would increase over that period.
Kathleen Brooks, research director at XTB, remarked that the survey showed ‘another sign that the UK housing market is picking up as interest rates are falling.’
Tom Bill, head of UK residential research at Knight Frank, observed that the ‘last two years have underlined the close relationship between mortgage rates and house prices – as one goes up the other goes down.’ Such a relationship is fundamental in laying out the conditions for consumer participation in the property market.
General Observations
Accordingly, decisions taken over the next few months – ranging from whether the Bank of England chooses to reduce interest rates in November to the economic plans enacted under the October budget – will play a decisive role in shaping the property market.
The data demonstrates that house prices and sales are heading in the right direction. Stepping away from a period of stagnation, the property market is showing signs of fertility as we head closer to the end of the year. Market interest is picking up as interest rates fall, while property prices across the nation are steadily rising. These trends will continue to play important roles in determining the performance of the property market.
