The August 2024 Halifax House Price Index released today found that house prices reached a two-year high last month; a typical property now costs £292,505 (compared to £291,585 in July), the highest since August 2022.
Following the release of the data, industry experts have shared their opinions with IFA Magazine.
Daniel Austin, CEO and co-founder at ASK Partners, said: “We are continuing to see a month-on-month rise in house prices, which is hopefully the sign of an upward trend developing for the rest of the year. The market certainly appears to be showing signs of resilience. Everyone is waiting in anticipation of what the new government will do to drive construction of new homes and unlock the planning system, and it is likely that initiatives announced in the coming months will give the market a further boost.
“In the property investment world, rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, we have seen values hit the bottom and confidence return. The market has picked up with opportunistic acquisitions of prime properties in prime locations.
“As a debt provider, we hope to support well-capitalised borrowers who understand their product and are looking at the best sites in prime locations with potential to add to their asset value. Following this strategy, we aim to bolster developers’ initiatives with the flexible underwriting approach that is necessary for navigating a changing market. This will enable us to continue to offer opportunities for the growing number of private individuals opting to invest in property debt.”
Tom Brown, Managing Director, Real Estate at Ingenious, said: “Today’s data shows that the resilience and appeal of the UK property sector persist. Though we have seen higher inflation and sticky borrowing rates, we welcome the BoE’s recent rate cut and what will hopefully be the start of the much needed falling rate cycle.
“There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors. This is a trend that is not going away. However, it’s crucial to recognise that the situation isn’t consistent nationwide or across different property pricing brackets. It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading. In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale Buy-to-let investors.
“At Ingenious, we continue to work closely with borrowers and investors, adapting to the dynamic market landscape and broader economic shifts, including those related to the climate crisis and changing lifestyles. We are expanding the reach of our development lending product to provide extended stabilisation terms for specialised developers in the rental sector. Furthermore, we’re introducing special lending terms for developers focused on reducing embedded carbon in their construction practices.”
Karen Noye, mortgage expert at Quilter: “The latest Halifax house price index suggests the typical mid-summer lull in housing market activity has had little impact on house prices this year, as the average UK house price rose by 0.3% in August following a 0.9% rise in July. Meanwhile, the annual rate of house price growth has jumped to 4.3% – the highest rate since November 2022. However, this largely reflects the impact of significantly weaker prices this time last year.
“A dip in activity is usually to be expected in the summer months, but this year it appears to be minimal, and we are instead seeing signs of an ongoing recovery in the housing market. Though the report from Halifax is somewhat at odds to others such as Nationwide which reported a fall in prices in August, there remains a general consensus that growth, at least on an annual basis, is picking up speed.
“The Bank of England’s decision to cut its base rate from 5.25% to 5% at its most recent monetary policy meeting will no doubt have contributed to the relatively robust market we have seen this summer, and as conditions become more predictable, we could see a rebound in prices in the autumn. For buyers, the impact of any Bank rate cuts in the near future will likely be relatively small, and the most immediate effects will be seen on tracker and standard variable rate mortgages, while fixed rate mortgage costs will likely factor in any cuts ahead of time. Though any cuts are likely to be gradual, the more stable landscape could see prospective buyers return to market.
“Though things appear to be heading in the right direction as far as mortgage rates are concerned, there are still a large number of people who are on fixed-rate deals that will soon end, forcing them to take on considerably higher bills than they have been accustomed to. Similarly, prospective buyers will face a dilemma as to whether to lock in a fixed-rate mortgage for the stability they provide or to opt for a tracker mortgage in the hopes that they will benefit from future rate cuts. For all who find themselves needing a new mortgage deal or are looking to move home, professional mortgage advice will be invaluable in ensuring they are getting the best possible deal for their circumstances.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “House prices gained momentum in August, setting the stage for a potential Autumn boost. Property transactions in September are typically 12% higher than in August, a trend that looks likely to continue this year.
“Recent moves by the Bank of England to cut the base rate and predictions for another potential cut later in the year should further fuel market activity. Inflation also remains close to the government’s 2% target — although it is expected to rise slightly — helping to boost buyer confidence in 2024.
“With lower mortgage rates and easing financial pressures, more buyers are pulling the trigger on their moving plans. Meanwhile, more first-time buyers are stepping into the market after many were previously priced out by high repayment costs. While house prices are steadily rising, an increase in housing supply — up 14% year-on-year in August — should help control price inflation. The number of homes listed for sale is at a seven-year high, helping balance out rising demand.
“Possible tax increases in October’s budget may temper this momentum slightly, and affordability challenges continue to impact some buyers. Despite this, there is cautious optimism that the current strength of the property market will help it navigate these challenges and hopefully remain on a steady growth path.”
Amy Knight, personal finance expert at NerdWallet UK, said: “For first-time buyers, inching towards homeownership feels like running uphill. Limited supply and not enough new builds have pushed the price of a typical property to £292,505, up from £291,268 in July, moving the financial goalposts for first-timers further away.
“For prospective buyers forced into the trap of renting for longer, saving a deposit remains an enormous challenge, particularly in the North West of England where house price growth hit 4%. With property prices hitting a two-year high and interest rates still at 5%, it can be tempting to give up and assume you’ll never get there, but don’t let house price headlines derail your plans. A strong budget combined with a little-and-often savings strategy is the key to maximising your affordability.
“Being flexible and open-minded about your location can make it easier to secure a mortgage you can afford. One or two base rate cuts before year-end will cheer on prospective homeowners, many of whom have benefited from strong wage growth this year, increasing their borrowing potential. Banks such as Lloyds and Halifax will let first-time buyers borrow 5.5 times their annual income, but before you commit, use a mortgage calculator to check how your deposit and mortgage term impact monthly repayments.”
Foxtons CEO, Guy Gittins, says:
“The patience of UK home sellers is now being rewarded, as house prices are increasing consistently from one month to the next and at their fastest rate since 2002.
“This growth is being driven by an uplift in buyer activity and whilst this has been building since the start of the year, we’ve certainly seen it step up a gear since the general election. As a result, we’re seeing more enquiries and more offers made, with buyers also acting with greater confidence since interest rates were cut at the start of the month.
“All in all, the outlook remains a positive one for the remainder of the year and we expect a strong level of activity to persist as we move into autumn.”
