House prices are rising in several regions of the UK and are expected to continue to rise throughout the year, the UK’s largest lender has revealed.
The housing market has virtually ground to a halt in the first half of this year, but there are signs that growth is picking up again.
But in the UK the picture is mixed, with house price growth only moderate in most regions.
In England, house price inflation is highest in the North West of England, where house prices rose by 3.8% in the past year to £231,351, Halifax said.
According to Halifax, Northern Ireland has seen the strongest property price growth of any country or region in the UK.
In June, prices rose 4% year-on-year, compared to 3.3% in the previous month.
House prices also rose in Scotland, with the average home now costing £204,663, up 1.6% on the previous year.
In Wales, house prices rose 2.7% annually to £220,197.
However, prices did not rise in all areas.
East of England was the only region or nation in the UK to see house prices fall over the past year.
House prices now average £328,747, down -0.9% year-on-year in June.
Meanwhile, London still has the most expensive house prices in the UK, with an average of £536,306 – an increase of 0.9% on last year.
What’s going on with house prices?
House prices have fallen significantly in recent years, with the average house price now sitting at £288,455, down slightly from £288,931 in May.
This means that the average house price in the UK remained relatively the same.
According to experts, this is largely due to high mortgage interest rates, which deter buyers.
In the UK as a whole, house prices fell by 0.2% month-on-month in June, equating to just under £500 in cash terms.
View our interactive map below to see the average house price in your area and the average annual price increases.
What could happen to house prices in the future?
According to the lender, house prices are likely to rise slightly this year and into 2025.
Amanda Bryden, head of mortgages at Halifax, said: “Mortgage affordability remains the biggest challenge for both homebuyers and those coming to the end of their fixed term.
“This problem is likely to gradually disappear through a combination of lower interest rates, rising incomes and more modest house price growth.
“While the housing market is in balance in the short term and sensitive to the pace of changes in the base rate, based on current expectations we expect house prices to rise modestly for the remainder of this year and into 2025.”
She added that this could gradually ease, especially if the Bank of England (BoE) cuts interest rates in August.
Interest rates have been at 5.25% for almost a year, a 16-year high, creating major affordability challenges, especially for first-time homebuyers.
In a sign of relief for borrowers, lenders including Halifax, HSBC UK, Barclays, Santander, NatWest and Yorkshire Building Society have cut their mortgage rates this week.
According to UK Finance, around 1.6 million mortgages will be taken out this year without a fixed interest rate.
What influence do the elections have on mortgage rates?
Labour’s landslide general election win could boost housing market confidence, some experts say.
Alice Haine, financial analyst at Bestinvest, said: “A stable political climate could potentially provide a confidence boost to the housing market, particularly a market that has struggled over the past year with high borrowing costs and a shortage of available and affordable stock.
“Buying a first home, moving up or down are all major personal finance decisions, so it’s crucial that you have confidence in the way your country is governed.
“Interest rates have been at a 16-year high of 5.25% for almost a year now, creating major affordability challenges for first-time homebuyers and those looking to move to a larger home.
Nicky Stevenson, managing director of estate agency group Fine and Country, added: “While the property market has been hit by high interest rates and political uncertainty, it has held up and is expected to strengthen further after the General Election.
“The annual house price forecasts reflect a more positive outlook than at the start of the year, helped by inflation reaching its 2% target.”
The BoE uses the base rate as leverage to control spending. Higher interest rates should dampen demand and spending, which in turn reduces inflation.
With inflation expected to fall this year, the BoE is expected to follow suit with rate cuts. It would be good news for homeowners looking to move, households looking to refinance their mortgages and first-time homebuyers, who can expect lower mortgage rates.
Who keeps track of house prices?
There are several house price indicators, each measuring something different.
The official measure comes from the Office for National Statistics (ONS), which examines the prices at which houses actually sell for after being registered in the Land Registry.
The organisation’s latest figures show that the average house price in the UK rose by 1.1% in the year to April.
This is the most accurate index of all, but the figures are not published until three months after the houses are sold, so there is a big time lag.
Some lenders and real estate websites also publish monthly indexes, which track the average prices of the homes on which they provide mortgages.
According to Nationwide, the average house price rose 0.2% in June.
The modest monthly growth means the average price of a UK home now stands at £266,064, according to the Nationwide Building Society index, up 1.5% on the same period last year.
According to Rightmove’s latest index, the average price of properties coming onto the market for sale in June fell by £21 to £375,110.
Zoopla’s June figures show that house sales rose for the fifth month in a row in May.
Although they adjust their figures to eliminate large outliers, both lenders base their calculations on the average house prices of the properties they see.
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