UK house prices reach new record high

House prices in the UK are now higher than they have ever been, Halifax estimates, surpassing the previous record set in summer 2022.
The high street lender calculated that house prices rose by an average of 0.2 per cent in October, which is about what economists had predicted.
Although they are not rising as fast as they were over summer, October marked the fourth consecutive monthly increase.
Compared with this time last year, prices are 3.9 per cent higher, with the annual rate of inflation easing from 4.6 per cent in September. They are rising fastest in Northern Ireland, where they are up 10.2 per cent compared with 12 months ago, and generally the north of England is comfortably outperforming the south. Scotland is the outlier, with prices there up only 1.9 per cent year-on-year, the weakest of any region.
On Halifax’s metric, the average UK house price now stands at £293,999, surpassing the previous peak of £293,507 set in June 2022.
Halifax measures house prices slightly differently from Nationwide, another big high street mortgage lender, which thinks that they are still 2 per cent or so off of their 2022 peak.
“That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place,” Amanda Bryden, head of mortgages at Halifax, said. “Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years.”
Over that time prices have risen 0.2 per cent, Halifax estimates, but that compares with growth of 21 per cent between 2020 and 2022.
That period of dramatic house price inflation was driven by the lockdown-induced “race for space”, as people sought bigger homes with larger gardens having been stuck inside for months on end.
The housing market was further fuelled by stamp duty holidays, but it came to a juddering halt in September 2022 as the mini-budget sent borrowing costs spiralling.
The downturn persisted for 18 months but estate agents and housebuilders have reported a steady pick-up in demand during 2024. They think would-be buyers have been encouraged by cheaper mortgage deals and house prices holding much firmer than many had anticipated after the mini-budget.
“Despite the affordability challenge, market activity has been improving,” Bryden said. “The number of new mortgages agreed recently reached its highest level in two years. This aligns with average mortgage rates dropping steadily since spring. now over 160 basis points lower than in summer 2023, coupled with continued positive income growth.”
Although mortgage costs have come down over the past year they remain much higher than a few years ago. Following last week’s budget the consensus is that interest rates, which determine mortgage rates, will not fall as quickly as previously predicted.
Reflecting that, Halifax expects house prices to rise over the coming months and into next year, albeit “at a modest pace”. Alex Kerr, a UK economist at Capital Economics, still thinks that interest rates will fall further than most expect in 2025, meaning that house prices will increase another 5 per cent next year, following on from a 3 per cent rise in 2024.