UK house prices rose in August for the third consecutive month, pushing the average property value to a new record high.
The average property price now stands at £299,331, according to figures from lender Halifax.
Despite the new record high, the annual rate of house price growth eased slightly to 2.2%, down from 2.5% in July.
Amanda Bryden, head of mortgages at Halifax, said:“UK house prices rose again in August, up by +0.3% (£932), marking the third consecutive monthly increase. The average property price now stands at £299,331 – a new record high – although annual growth has eased slightly to +2.2%.”
Despite rising house prices, Bryden said that affordability is gradually improving, largely due to ongoing reductions in interest rates. “Interest rates have been on a gradual downward path for nearly two years, and many of the most competitive fixed-rate mortgage deals now offer rates below 4%,” she added.
She also pointed to strong wage growth as a contributing factor in boosting buyers’ confidence. “Combined with strong wage growth – which has outpaced house price inflation for nearly three years – this is giving more prospective buyers the confidence to take the next step.”
One of the more positive developments this summer has been the improvement in affordability for first-time buyers. Although overall house prices have risen, the cost of properties for first-time buyers has actually dropped.
Bryden explained: “Though overall prices have edged higher, average property values for first-time buyers moved in the opposite direction over the summer, a trend that will be welcomed by those looking to get on the ladder.”
The typical first-time buyer property now costs £237,577, a slight decrease of 0.6% since May. On a 95% loan-to-value (LTV) mortgage over 30 years, monthly repayments for this property would be approximately £1,179, which is lower than the average UK private rent of £1,343.
Across the UK, there are regional differences in house price growth, with Northern Ireland continuing to lead the pack for annual growth. Average property values in Northern Ireland have increased by 8.1% over the past year, although this is a slowdown from last month’s 9.3% rise. The average home in the region now costs £217,082.
Scotland saw the second-highest annual increase in August, with prices rising by 4.9% to an average of £215,594.
In Wales, property values have risen by 1.6% year-on-year, though the pace of growth has slowed in recent months. The average home in Wales is now priced at £227,786.
England, meanwhile, is showing a clear North/South divide. The North East, North West, and Yorkshire & the Humber all saw annual growth above 4%, making them the fastest-rising regions in the country.
At the other end of the spectrum, the South West recorded a decline in property prices, with a drop of 0.8% over the past year.
London continues to see modest growth, with prices up by 0.8% year-on-year. However, it remains the most expensive place to buy a property in the UK, with an average price of £541,615.
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