UK house prices rose by a modest 1.3% in the year to September, according to Halifax, marking the weakest annual increase since April 2024.
The figure fell short of economists’ expectations, with a Reuters poll predicting growth of 2.2% following August’s 2% rise, signalling buyer caution ahead of the upcoming autumn budget.
On a monthly basis, the cost of a typical home fell by 0.3%, or £794, to £298,184, reversing August’s 0.2% increase. First-time buyer properties averaged £236,811, up 1.7% year on year, with affordability varying across different regions.
Amanda Bryden, head of mortgages at Halifax, part of Lloyds Banking Group, said: “While affordability remains a challenge, a relatively lower mortgage rate environment and steady wage growth have helped support buyer confidence.
Although the broader economic outlook remains uncertain, with the affordability picture gradually improving, we continue to expect modest growth through the remainder of the year.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, added: “Buyer enthusiasm subsided again in September, bringing house prices down slightly from August’s record high. It’s not a catastrophic plunge, and prices are still fractionally up over the year. This isn’t a market that’s running off a cliff, it’s one that’s stuck in the mud.
“The market may not be going anywhere fast for a while. There are some positive signs around, not least the fact that there are decent mortgage rates available. They’re not getting any cheaper in a hurry, but the average two-year fixed-rate deal remains below 5% and the average five-year fixed-rate mortgage is only fractionally above.”
The Bank of England left interest rates on hold at 4% last month after five reductions since last summer. Governor Andrew Bailey has urged caution amid persistent inflation, which stood at 3.8% in August, nearly double the central bank’s 2% target, driven in part by high food prices.
There are signs that buyers are holding back ahead of Chancellor Rachel Reeves’s autumn budget on 26 November, which is a month later than last year. The Guardian reported in August that the chancellor is considering replacing stamp duty with a new levy on homes sold for over £500,000.
Taylor Wimpey, one of Britain’s largest housebuilders, highlighted “the impact of the delayed UK budget on short-term customer confidence” last week.
Guy Gittins, chief executive of estate agents Foxtons, said: “Market momentum remains steady and this underlying stability is encouraging buyers and sellers back into the fold, albeit with a degree of caution ahead of November’s budget.”
A separate Nationwide Building Society survey published last week showed a 0.5% monthly rise in house prices in September, indicating “broad stability” in the housing market.
