The annual house price growth rate picked up to 2.4% in August, up from 2.1% in July, Nationwide’s latest House Price Index has revealed.
This marked the fastest pace of annual growth since December 2022.
Throughout August, house prices fell by 0.2% month-on-month, with the average price falling to £265,375 from £266,334 in July.
Energy efficiency proved to be influential, with many willing to pay a premium if it means their Energy Performance Certificate (EPC) rating is a Band C or above.
Robert Gardner, chief economist at Nationwide, said: “UK house prices fell by 0.2% month on month in August, after taking account of seasonal effects, but the annual rate of house price growth continued to edge higher.
“Average prices were up 2.4% year on year, a slight pickup from the 2.1% recorded in July and the fastest pace since December 2022 (2.8%).
“However, prices are still around 3% below the all-time highs recorded in the summer of 2022.
“While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience in the context of the higher interest rate environment and where house prices remain high relative to average earnings, which makes raising a deposit more challenging.
“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Reaction:
Nathan Emerson, CEO of Propertymark:
“Considering the number of disruptions within the economy across the last few years, it’s extremely encouraging to see stability across the housing sector.
“When politicians return from their summer recess in September, it is essential to see progression in delivering nearly two million homes across the next Parliamentary term as promised by the UK Government.
“The starting block for this is ensuring the Planning and Infrastructure Bill takes robust shape to help ensure supply keeps pace with current housing demand.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“With agents reporting activity levels up as much as 20% on the same period last year, the housing market is on a firmer footing and buyer and seller confidence is noticeably stronger.
“If that isn’t filtering through into higher prices month-on-month that is likely to be down to affordability constraints caused by higher mortgage pricing.
“There is pent-up demand created by buyers waiting for the much-anticipated first rate reduction.
“With lenders subsequently reducing their mortgage rates, launching sub-4% 5-year fixes, the days of rock-bottom mortgages may be long gone but more palatable pricing is helping sentiment.
“Now that the Bank of England has reduced rates, it sends out a strong message that they have not only peaked but are on a downwards trajectory after months of uncertainty.
“It enables people to make decisions with confidence and we anticipate a strong autumn market although the Budget looms ominously.”
Karen Noye, mortgage expert at Quilter:
“These quieter months usually see a slowdown as people focus on holidays rather than house hunting.
“However, this summer has still marked a recovery after several months of relatively flat results, reflecting the challenging economic conditions but a strong housing market.
“As conditions become more predictable, both buyers and sellers are gaining confidence that they can achieve their housing goals without the looming threat of mortgage shocks, which might mean there is a bounce in prices in the autumn.
“The recent decision by the Bank of England to cut its base rate from 5.25% to 5% has further bolstered this confidence, even though the cut’s direct impact on tracker mortgages and standard variable rate mortgages (SVR) will be relatively minor, and fixed-rate mortgage costs have largely already factored in this small reduction.
“The structure of the mortgage market, with a large proportion of homeowners on fixed-rate deals, has so far cushioned many from the full impact of rising interest rates.
“However, as these deals begin to expire, the market could face renewed pressure, particularly if further rate cuts are slower or less substantial than anticipated, which could curtail house price growth later this year and next.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“One small interest rate reduction and the market responded instantly, even though it was August.
“It’s been a very successful month, with a large number of sales agreed in all price ranges at a time when agents usually complain it is quiet.
“As the rate reduction was widely expected, we were ready – encouraging sellers to reduce their price, or launch their properties at the end of July/beginning of August, rather than wait until September as most would usually choose to do.”
Tomer Aboody, director of specialist lender MT Finance:
“Any concerns or uncertainty there may have been pre-election dissipated in August as property market sentiment picked up, buoyed by the rate cut.
“High borrowing costs have been an issue for a while so with lenders trimming their mortgage rates and promise of more reductions from the Bank of England to come, this should lead to an increase in activity in the autumn.
“While there are concerns about what the Budget will have in store, the Chancellor has an opportunity to tackle Stamp Duty reforms to assist buyers and boost all-important transaction levels.
“Let’s hope she takes it, benefiting not only the housing market but the wider economy.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“Patience has certainly been a virtue for UK home sellers in recent times, but there’s no doubt that they are now being rewarded, as the UK property market continues to demonstrate a high level of resilience with yet another annual increase in property values and the largest increase since December 2022.
“This growth is being driven by an uplift in buyer activity and whilst this has been building since the start of the year, we’ve certainly seen it step up a gear since the General Election.”
Ed Phillips, CEO at Lomond:
“It’s been a story of two halves for the UK property market so far this year, with a tentative first six months seeing a stable but largely static market, whilst the pace has really started to pick up since the July election, with an increase in buyer confidence helping to drive annual house price performance.”
Marc von Grundherr, director at Benham and Reeves:
“Summer may be coming to an end but there’s certainly no end in sight when it comes to the improvements being seen across the UK property market.
“It’s quite remarkable just how swiftly the market has accelerated in just a few short months both with respect to the number of mortgage approvals being seen, as well as the increase in the rate of annual house price appreciation.
“Although Labour are now warning of a ‘painful’ budget to come in October, this is unlikely to derail the ambitions of the UK’s buyers and sellers, who are now making their move with confidence following a prolonged period of market uncertainty.”
Verona Frankish, CEO of Yopa:
“Today’s figures provide the first look at house price performance since interest rates were cut at the start of August and despite the very marginal monthly decline, it’s clear that the first reduction in four years has helped to further boost the market momentum, with yet another strong rate of annual house price growth being seen.
“Whilst the base rate remains considerably higher than many buyers and sellers may be accustomed to, the expectation is that another cut will come before the year is out, which should only help to strengthen buyer appetites further.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“August’s minor drop in house prices is likely to be seen as a hiccup, with longer-term indicators suggesting that the housing market is battling its way back to good health.
“The Bank of England’s base rate cut in August has encouraged many potential buyers to move forward with their plans, but for some there is a sense of hesitation.
“Speculation about another rate cut later this year may be causing some buyers to wait a little longer before making a move.
“With inflation hovering around the Government’s 2% target and interest rates remaining low, there are promising opportunities for those looking to buy a home or move up the property ladder.
“In response to this, a mortgage price war has erupted in recent weeks as lenders compete to undercut one another to attract buyers.
“Nationwide recently announced a 5-year fixed rate deal at just 3.78% — among the lowest rates available. Experts are now forecasting a late summer boost in the housing market.
“This has certainly breathed new life into UK property. However, while some buyers are benefiting, others may still face affordability challenges.
“As we head towards the end of 2024, inflation is expected to rise slightly, which could influence the Bank of England’s decision on whether to cut the base rate further.
“It’s important to keep an eye on these developments to fully understand their impact on the market.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“A slight downwards readjustment in house prices, tempered with strong annual growth, reflects well on a property market that is showing resilience in the face of ongoing challenges.
“We are seeing house prices rising at the fastest pace since the closing months of the pandemic when there was a rush to buy properties as people adjusted to remote and hybrid work patterns.
“The Bank of England believes that inflationary pressures have eased enough to start cutting borrowing costs, which in turn will enable more buyers to get a mortgage in principle.
“This could push sellers to be less flexible on the asking price if there is a significant boost of hopeful buyers in their area.
“While headline inflation figures are looking brighter than last year, many first-time buyers are still not out of the woods yet when it comes to the challenging living costs.
“Estate agents across the country are telling us that the market conditions in their areas are improving and there is a strong demand for good-quality housing.
“A notable trend is the growing emphasis on energy-efficient homes, with buyers seeking properties with lower fuel bills and a smaller environmental footprint.
“This is particularly important right now as energy prices are set to rise again this winter.
“Properties that benefit from these benefits will be in high demand.
“Overall, the modest growth we are seeing will be a benefit to homeowners, while ensuring that buyers are not priced out of the market.
“We are forecasting that the year will continue to play out this way.”
Jonathan Hopper, CEO of Garrington Property Finders:
“This is no back to school bounce but many prospective buyers have started their homework.
“With the cost of borrowing creeping down throughout August following the Bank of England’s pivotal decision to start cutting its Base Rate, thousands of would-be buyers have set themselves the question ‘if not now, then when?’
“The summer holidays are traditionally a slow time for both property viewings and offers, but buyer sentiment has been boosted by the growing realisation that we’re at last in an interest rate cutting cycle and that cheaper mortgages are appearing every week.
“Yet this sea change hasn’t yet translated into widespread rising prices as buyers search for strong value.
“The Nationwide’s data shows that average prices across the country fell slightly in August compared to July, and on the front line we’re still seeing prices come down in the most expensive parts of London and the Southeast.
“By contrast, prices are marching steadily upwards in more affordable locations and this has pushed the Nationwide’s annual rate of price inflation up to levels not seen since 2022.
“With many buyers now back from holiday and setting themselves the goal of moving by Christmas, demand is likely to notch up markedly over the coming months. But the supply side of the equation should keep price rises in check.
“We’ve seen a surge of homes for sale coming onto the market in recent weeks, and this jump in supply has yet to be fully absorbed.
“With many buyers spoilt for choice and sellers keen to get a deal done, big discounts are still achievable.”
