Market News

• Figures chime with Nationwide data showing increasing prices
• Prices rose most in Northern Ireland and by 1.2% in London

By Irina Anghel and Eleanor Thornber

(Bloomberg) -- UK home prices resumed growth after a three-month lull, gaining at the strongest pace since January in a further sign that the market is coping with elevated interest rates, one of the nation’s biggest mortgage lenders said.

Halifax said the average price of a typical UK house rose 0.8% in July to £291,268 ($370,040) after no change for the previous three months. It supports figures reported earlier from Nationwide Building Society showing prices up 0.3% on the month.

The latest data suggests property prices are on a slow recovery after a mild downturn last year, which was much less severe than the drop of 10% or more that economists warned would accompany the highest borrowing costs in 16 years. The Bank of England last week cut its key lending rate for the first time since the pandemic, a move that may boost confidence among buyers.

“We anticipate house prices to continue a modest upward trend throughout the remainder of this year,” said Amanda Bryden, head of mortgages at Halifax.

Britain’s Labour government, which took office after an election victory on July 4, put house building at the heart of its agenda and has promised to build 1.5 million new homes over the next five years. 

Affordability remains a constraint in the market after the Bank of England lifted its benchmark lending rate to a 16-year high last year. While the central bank cut that rate for the first time since the pandemic earlier this month, mortgage rates remain well above levels prevailing until 2019. Nationwide estimates the average first time buyer can expect to spend around 37% of their pay on mortgage payments, up from around 28% pre-Covid.

Halifax said prices rose the most in Northern Ireland, gaining 5.8% from a year ago. In London, the average cost of a home rose 1.2% to average £536,052. Eastern England is the only region where prices posted a decline over the last 12 months.

(Updates with details from the statement.)