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UK house price growth has accelerated in the past month as buyer confidence picked up and mortgage rates fell ahead of a potential interest rate cut by the Bank of England.
UK house prices rose by 0.3 per cent month on month in July, Nationwide reported in their monthly house price index.
The annual growth rate rose to 2.1 per cent from 1.5 per cent in June, the fastest pace of growth since December 2022.
However, prices are still around 2.8 per cent below the all-time highs recorded in the summer of 2022.
“Affordability is still stretched for many prospective buyers… [but] investors expect Bank Rate to be lowered modestly in the years ahead, which, if correct, will help to bring down borrowing costs,” Robert Gardner, Nationwide’s Chief Economist, said.
Nathan Emerson, CEO of Propertymark, said:“The housing market is regaining a real sense of positivity. Now that inflation appears to be staying within target it would further stimulate growth within the housing sector if the Bank of England feels confident enough to allow a slight interest rate cut when the Monetary Policy Committee meets later today.
It has been widely anticipated that the Bank may look to lower the base rate today, and at a time when we have a new government who have committed to building near two million new homes by 2029, this combination of factors could lead to a rejuvenation for the housing sector.”
The Bank of England could cut interest rates later today.
Since lifting rates to a 16-year high in August last year, the Bank has kept rates at 5.25 per cent.
Mortgage rates have more than doubled for borrowers with a 25-year deposit since 2019, Nationwide said.
However, a rate cut today won’t be a silver bullet for home owning, Nationawide added.
“Affordability is likely to improve only gradually through a combination of wage growth outpacing house price growth (which is expected to remain fairly flat), with some support from modestly lower borrowing costs,” Gardner said.
Matt Thompson, head of sales at Chestertons, said: “Despite some uncertainty over the Bank of England’s decision to cut interest rates today, July’s property market still saw an increase in buyer activity.
“This return of buyer confidence was not only boosted by the General Election results but also by some lenders introducing more attractive mortgage products with sub-4 per cent rates.”
