Nationwide: September surge fastest in two years
- In September, house prices were up 0.7% in a month and 3.2% in a year.
- This is the fastest rate of growth since November 2022.
- House prices are now around 2% below the all-time highs reached in summer 2022.
- The average house price is £266,094
Nationwide has released its house price index for September: September records fastest annual house price growth in two years (nationwidehousepriceindex.co.uk)
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“Buyers were back with a bang, prompting a September surge. This time of year is always fairly busy, but falling mortgage rates and wages outstripping inflation have prompted a burst of enthusiasm which has pushed prices up to within 2% of their pandemic-induced peaks. These aren’t runaway price rises, but they’re firmly positive, which always helps boost buyer sentiment and keep the wheels rolling on the property bandwagon.
With every month that wages outpace house price growth, it makes it easier for people to borrow what they need. It also opens up more wiggle room in their budgets, easing the pressure and encouraging buyers to consider trading up. Meanwhile, mortgage rates have continued to drift downwards. At the end of June, the average 2-year fixed rate was 5.99% and it’s now 5.4%. If you go back a year it was 6.48%, so rates have dropped almost a percentage point.
The market has already priced in cuts from the Bank of England, so if we get one more in 2024 and then a small series in 2025 it’s not going to shift deals spectacularly. However, they’re likely to keep falling gradually, which will keep buyers switched on.
First-time buyers
This is great news for sellers, who need a buoyant property market to shift their home. It’s less positive for first-time buyers, who can see the property of their dreams move even further out of reach. If you have at least a year until you plan to buy, it’s worth considering a Lifetime ISA. You need to be aged 18-39 to qualify, but you’ll get a bonus of up to £1,000 a year from the government to help boost your deposit. If you’re not planning to buy for 5-10 years or more, you can invest the money too, boosting its growth potential.
The good news is that more buyers are discovering the benefits of a Lifetime ISA. HMRC statistics for 2022/23 showed it was a record year for the LISA, with more people paying into one than any other year since launch. They paid in significantly more too – at an average of £3,170, and attracted 40% more cash than a year earlier. If you haven’t got a LISA it’s well worth considering. It’s a vital lifeline in a market that’s feels increasingly stacked against you.”
