House prices hit new record after surpassing pandemic peak

House prices have hit a new high, according to Halifax, surpassing the previous peak set in June 2022 during the pandemic housing boom.

The average home price rose for the fourth consecutive month in October, according to the bank, which bases its figures on its own mortgage applications.

The typical property rose 0.2 percent over the month, while year-on-year prices rose 3.9 percent.

It means the average property price has hit a record high of £293,999, surpassing the previous peak of £293,507.

Amanda Bryden, Halifax mortgage director, said: “That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps most notable is that they didn’t fall much to begin with. “.

‘Despite the headwind of higher interest rates, house prices have mostly stabilized over the past two and a half years, recording an overall increase of 0.2 per cent.

“That’s a significant slowdown compared to the 21 percent increase we saw in the equivalent period from January 2020 to summer 2022.

Why have house prices risen?

Lower rates and a more stable mortgage market have helped encourage more people to buy homes this year.

Although mortgage rates rose during the first half of this year, they have since fallen again. Most borrowers can now get a two- or five-year fixed-rate mortgage of between 4 and 5 percent. Some can even go below 4 percent if they have a large enough deposit.

Average mortgage rates are now more than 160 basis points lower than they were in the summer of 2023. Meanwhile, household incomes have been rising.

The number of new mortgages agreed recently reached its highest level in two years, according to data from the Bank of England.

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However, interest rates have been rising slightly in recent weeks, and several major lenders have repriced mortgage loans in response to changing market forecasts for future interest rate cuts.

Halifax’s Amanda Bryden suggests we are likely to see only a little house price growth in the coming months.

“Looking ahead, debt constraints remain a challenge for many buyers,” Bryden added.

‘After the Budget, markets expect the Bank of England to cut rates more slowly than expected, which could keep mortgage costs higher for longer.

‘New policies such as higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers could also affect demand.

“While we expect house prices to continue growing, they will likely do so at a modest pace for the rest of this year and next.”

Tom Bill, head of UK residential research at property firm Knight Frank, believes higher mortgage rates could push prices back down.

‘The interest rate outlook has become more adverse than a fortnight ago, which will increase downward pressure on house prices in the short term.

“For now, anyone deciding whether to set the deadline for two or five years should consider whether they believe Labour’s revenue-raising plans will work or whether more rates turbulence is ahead during this Parliament.”

Where are housing prices rising the most?

Northern Ireland continues to record the highest house price growth of all regions, with a staggering 10.2 per cent increase since last October. The average house price in Northern Ireland is now £204,242.

House prices in Wales also recorded strong growth, up 5.6 per cent on the previous year, with properties now costing an average of £225,543.

Once again, Scotland saw a more modest increase in house prices. A typical property now costs £206,480, up 1.9 per cent on the previous year.

The North West remains the fastest growing region of England, up 5.9 per cent on last year to £235,587.

House prices in Yorkshire and the Humber have increased by 5.3 per cent on average year on year.

Meanwhile, house prices in the Midlands have performed strongly. The typical home in the East Midlands has increased by 4.4 per cent year on year. In the West Midlands prices have risen 4.7 per cent year-on-year.

London continues to have the most expensive property prices of any region, with an average of £543,308. Prices in the capital have risen 3.5 percent compared to last year.