UK house prices rose by a slower-than-expected 1.3% in the year to September, according to Halifax, the weakest annual figure since April 2024.
The reading confounded a Reuters poll of economists that forecast it would pick up to 2.2% from August’s 2% rate, suggesting caution in the market in the run-up to the autumn budget.
The cost of a typical home fell month on month by 0.3%, or £794, to £298,184, reversing a 0.2% rise in August.
The average first-time buyer property sold for £236,811, up 1.7% year on year, with pockets of greater affordability to be found across different regions.
“While affordability remains a challenge, a relatively lower mortgage rate environment and steady wage growth have helped support buyer confidence,” said Amanda Bryden, the head of mortgages at Halifax, part of Lloyds Banking Group.
“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, the head of personal finance at the investment platform Hargreaves Lansdown, said: “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 rate cuts since last summer. The Bank’s governor, Andrew Bailey, has urged caution given persistent inflation, which was 3.8% in August, nearly double the central bank’s target, partly because of high food prices.
There is some evidence that buyers are holding back before Rachel Reeves’s budget on 26 November, a month later than last year’s set-piece fiscal event. The Guardian reported in August that the chancellor was considering replacing stamp duty with a new levy on the sale of homes worth more than £500,000.
Taylor Wimpey, one of Britain’s biggest housebuilders, last week talked of “the impact of the delayed UK budget on short-term customer confidence”.
Guy Gittins, the chief executive of the 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 survey from Nationwide Building Society published last week showed a 0.5% monthly rise in house prices in September with “broad stability” in the housing market.
