House prices rose for the third month in a row in September, according to the latest figures from Halifax, bringing the average home within £108 of the 2022 peak.
Property values surged 4.7 per cent annually, according to one of Britain’s biggest lenders, marking the biggest rise since November 2022.
While the typical home price has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months.
The typical home now costs £293,399, which is the highest recorded since June 2022, when prices peaked at £293,507.
On the up: Year-on-year prices are up 4.7%, according to Halifax – the strongest rate since November 2022
Amanda Bryden, head of mortgages, Halifax, says prices have been helped by improved market conditions over the summer and into early autumn.
‘Mortgage affordability has been easing thanks to strong wage growth and falling interest rates,’ said Bryden.
‘This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40 per cent in the last year and now at their highest level since July 2022.
She adds: ‘While improved mortgage affordability should continue to support buyer activity – boosted by anticipated further cuts to interest rates – housing costs remain a challenge for many.
‘As a result we expect property price growth over the rest of this year and into next to remain modest.’
Mortgage rates have been steadily falling over the past few months.
Last week, five major mortgage lenders announced rate cuts on the same day.
Since the start of July, the lowest five-year fixed rate mortgage has fallen from 4.28 per cent to 3.68 per cent.
Meanwhile, the lowest two-year fix has fallen from 4.68 per cent to 3.84 per cent during that time.
Tom Bill, head of UK residential research, Knight Frank, said: ‘The last two years have underlined the close relationship between mortgage rates and house prices – as one goes up the other goes down.
‘We expect low single-digit price growth this year as rates continue to drift lower, with the Budget the main cause of uncertainty on the horizon.
‘If it is better than feared, there is likely to be a relief bounce in activity before Christmas that lasts into next spring.’
Recovery: Higher annual growth continues to reflect the base impact of weaker prices a year ago, according to Halifax
Where house prices are increasing the most
Northern Ireland continues to record the fastest price growth of any UK region with the average home there rising by 9.7 per cent on an annual basis in September.
The North West recorded the strongest house price growth of any English region, with the average home up by 5.1 per cent over the last year, to sit at £234,355.
House prices in Wales also recorded strong growth, according to Halifax, up 4.4 per cent, compared to the previous year,
However, Scotland saw a more modest rise in house prices, where a typical property now costing £205,718, which is only 2.1 per cent more than the year before.
The most expensive property market, London, where the average home now costs £539,238, is up 2.6 per cent compared to last year.
This is still some way below the capital’s peak property price of £552,592 set in August 2022.
House prices climbed for the third month in a row in September, with a slight increase of 0.3 per cent, or £859 in cash terms
Jonathan Hopper, chief executive of Garrington Property Finders, said: ‘The recovery is real but not rocket-fuelled.
‘Average property prices across the UK are back within touching distance of the all-time high the Halifax recorded in June 2022, but the pace of progress varies widely across the UK.
‘There’s a clear north-south split in England, with prices in the North West rising at double the speed of those in London. In the capital’s prime and super-prime markets, we’re seeing prices hold steady and even tick down in some areas.
‘The Halifax’s data shows the average London home is currently worth over £13,000 less than it was in August 2022.
‘The reason for this regional split is that while buyer appetite is surging, many buyers remain highly price sensitive and strong value is key.
‘Prices are rising fastest in more affordable locations as buyers who are fed up with waiting seek more home for their money.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.