Halifax data suggests UK house prices not on "precipice of downturn"

(Alliance News) - UK house prices climbed last month, according to a tracker from Halifax, contradicting findings from fellow mortgage lender Nationwide.

UK house prices rose in August at the fastest annual rate in nearly two years, data published by Halifax showed Friday.

UK house prices jumped 4.3% year-on-year in August, accelerating from 2.4% growth in July and the strongest rate since November 2022. July's annual growth was upwardly revised from a previously reported 2.3%. It beat FXStreet-cited market consensus of 4.2%.

"Recent price rises build on a largely positive summer for the UK housing market. Prospective homebuyers are feeling more confident thanks to easing interest rates. That optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years," said Amanda Bryden, head of Mortgages at Halifax.

On a monthly basis, UK house price growth decelerated to 0.3% in August from 0.9% in July, the earlier month's growth upwardly revised from a previously reported 0.8%. August's growth was higher than consensus of 0.2%.

However, Nationwide had reported prices fell 0.2% on-month in August.

Capital Economics analyst Ashley Webb said: "The second consecutive monthly rise in the Halifax house price index in August supports our view that the fall in Nationwide house price index in the same month was a blip and it isn't the start of new downturn.

"[It] suggests that the Halifax index continues to be more sensitive to changes in mortgage rates than the Nationwide data."

Webb added: "Overall, today's data release supports our view that the housing market isn't on the precipice of a new downturn. Admittedly, we don't expect house prices to rise much further this year either. But if we're right to think that bank rate will eventually fall from 5.00% now to 3.00%, the resulting drop in mortgage rates should boost demand and give house prices renewed impetus next year. That may mean house prices rise by around 5% in 2025."

On August 1, the Bank of England cut its interest rate to 5.00% from 5.25%.

Some of Britain's biggest lenders have been cutting mortgage rates this week, including sub-4% deals.

NatWest Group PLC launched a deal on Tuesday with the cheapest five-year fixed rate currently on the market, according to financial information website Moneyfacts.

Barclays PLC also reintroduced some new mortgage products and reduced rates on a selection of deals on Tuesday.

Barclays' new products include a five-year fixed-rate mortgage at 4.05% for people buying a home with a 25% deposit, with no product fee.

HSBC UK announced details of mortgage rate cuts across its ranges on Tuesday.

By Eric Cunha, Alliance News news editor

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