The average house price in the UK came close to hitting a record high last month as falling mortgage rates helped boost buyer confidence, according to Halifax.
The UK's largest mortgage lender said the average price reached £293,399 in September, just below the record high of £293,507 reached in June 2022.
Prices have increased for three consecutive months, Halifax said, as market conditions improve.
“Mortgage affordability has improved thanks to strong wage growth and falling interest rates,” said Amanda Bryden, head of mortgage lending in Halifax.
“This has boosted confidence among potential buyers, with the number of completed mortgages exceeding 40% over the past year and now reaching its highest level since July 2022.”
Compared to last year, Halifax said house prices increased by 4.7%, the fastest pace of growth since November 2022.
This partly reflects the weakness in activity a year ago. The value of a typical property has increased by around £13,000 over the past year, but this is a rebound following a drop in value over the previous 12 months.
In two years back, prices had risen just 0.4%, the equivalent of £1,202, the Halifax said.
Guy Gittins, managing director of estate agents Foxtons, told the BBC's Today programme: “The market is recovering.
“It certainly won't be the best year we've ever had, but every time we see a slight drop in interest rates, more buyers come back from last year's backlog.”
Karen Noye, mortgage expert at Quilter, said: “Currently some lenders are offering deals around the 4% mark, a stark contrast to the rates of 5% or more seen immediately after the 2022 mini-budget and in beyond.
“This reduction in rates has allowed buyers to secure larger mortgages, making previously unaffordable properties more accessible and boosting buyer confidence.”
However, Ms Noye added that the cost of borrowing was still out of reach for many, particularly first-time buyers.
As of Monday, the average rate for a two-year fixed-rate mortgage was 5.38%, according to financial information service Moneyfacts. He said the average for a five-year fixed deal was 5.05%.
Halifax said that despite recent reductions in mortgage rates, “housing costs remain a challenge for many”.
According to the lender, the typical first-time buyer is now buying a property for £232,769, which is the highest price since May this year.
However, this is still around £1,000 less than the average amount a first-time buyer paid two years ago.
Halifax's house price data is based on its own mortgages, which does not include buyers purchasing homes outright or leases. Cash buyers account for about a third of home sales.
