Annual house price growth accelerated in September – ONS

The annual pace of price growth estimated by the ONS ticked upwards from 2.7% in the year to August.

Average house prices increased in England to £309,000 (a 2.5% annual increase), in Wales to £217,000 (0.4%), and in Scotland to £198,000 (5.7%), in the 12 months to September 2024.

The average house price for Northern Ireland was £185,000 between April and June, up by 6.4% from a year earlier.

The figures were released as the ONS said that Consumer Prices Index (CPI) inflation accelerated to 2.3% in October, from 1.7% in the previous month.

Inflation was higher than expected for the month, with economists having predicted an increase of 2.2%.

David Hollingworth, associate director at L&C Mortgages said the jump in inflation could “bring further headaches for mortgage borrowers”.

He said: “Although the rate lifting above target is not a shock, at 2.3% it is a little higher than many had expected. That will pour more cold water on the prospects for another cut to (the Bank of England) base rate to come next month, which will be disappointing news for those on a variable or tracker rate mortgage.”

Mr Hollingworth said fixed rate mortgages have climbed in recent weeks, adding: “Those increases are due to the less optimistic forecast for interest rates and today’s figures will do nothing to change that.

“Although still expected to fall, the growing expectation has been for rates to fall more slowly and not as far as previously anticipated.”

Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners said: “Homeowners and first-time buyers are likely to be disheartened by the latest inflation reading, as it reduces the likelihood of a third rate cut this year.

“The average cost of a new fixed rate mortgage has been creeping up since the Budget, as lenders price their products to reflect expectations that interest rates may stay higher for longer.

“With the latest inflation reading confirming that inflation has not only risen back above the (Bank of England’s) 2% target but has come in higher than expected, it means that mortgage borrowers could have more pain to contend with if more lenders adjust their rates upwards.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Further rate reductions are more likely next year than this one, with swap rates (which are used by lenders to price mortgages) rising on the back of today’s inflation figures.

“However, while inflation rose more than expected, it’s still only just above the 2% target and fluctuations are not unexpected.”

Headwinds

Nick Leeming, chairman of estate agent Jackson-Stops, said: “Despite the base rate being cut to 4.75%, this reduction is not yet feeding through into mortgage rates due to external headwinds.

“But the market should take confidence from the fact that activity levels are up year-on-year.”

ONS figures also showed that average UK private rents increased by 8.7% in the 12 months to October.

This was up from 8.4% annual price growth in September, but below a record high of 9.2% in March.

Sarah Coles, head of personal finance at Hargreaves Lansdown said: “Getting good news about your rent is about as common as discovering your housemates have washed up for you, or your landlord suggesting you get a dog.

“It means for many, the only way out of the endless cycle of rising costs is to buy, but this is far easier said than done when rents absorb so much of your income.”

Nathan Emerson, CEO at Propertymark, said: “Selling up altogether or turning to the short-term letting market is becoming a more attractive option for landlords due to the challenging legislative changes and increased financial liabilities they face.”