by Rosie McLean 
September has seen the news from Rightmove that seller and buyer demand is on the up – prompting national average asking prices to rise by 0.8% on the month and by 1.2% over the year. Nationally, asking prices increased by £2,974 to £370,759 over the month.
Although a September price rise is usual after the distraction of the summer for buyers and sellers alike, the growth was double the long-term average for the period.
Mortgage cuts helped drive market activity
The price rise has been driven by strong activity since the summer’s base rate cut at the beginning of August, the first in four years, to 5%. Mortgage rates had already begun falling in anticipation, prompting interest from those buyers and sellers who had put their moving ambitions on hold until a wider recovery in the market.
The pause had been prolonged while buyers and sellers waited for interest rates and mortgage rates to fall, with demand falling significantly in 2023 as mortgage rates had risen but now cuts are starting to happen, demand is increasing. In September, the Bank of England held the base rate at 5% for a second month after previously cutting it in August. A further cut is expected towards the end of the year which could further stimulate demand.
In August, lenders Halifax and Nationwide both reported house prices growing at the fastest annual pace since December 2022.
Revised forecasts
Long-term annual forecast growth expectations are around 1.5% by the end of the year, according to predictions from Lloyds Banking Group. It revised its figures in August after the base rate cut. Previously the company had expected that the squeeze on available cash coupled with consumer uncertainty would mean a smaller housing market this year and house price falls of between 2 and 4% for the year.
Similarly in August, Rightmove also revised its 2024 forecast to 1% for the year overall. It had previously predicted a 1% drop in prices for 2024. And Savills revised its five-year outlook in May to predict a 2.5% increase in value over 2024, up from its previous forecast of a 3% fall. It expects house price inflation to hit at least 4.5% a year until 2028 and peaking at 5% in 2027. This would mean a 21.6% increase in value on this year.
Zoopla, meanwhile, anticipates stronger growth. Its figures show that over the first seven months of 2024, house prices rose by 1.5%. In August it predicted that average house prices were set to rise by 2.5% by the end of 2024.
The most recent ONS figures, published on 18 September for July 2024 and therefore before the base rate cut, show an average property price of £290,000 for the month, equal to an annual price rise of 2.2%.
The impact of external factors
The general consensus is, therefore, that house prices are likely to continue to rise over the rest of this year and for the year as a whole. This is in contrast to many earlier forecasts. However, various factors could impact further house price growth, including consumer confidence, further base rate cuts and the Budget, which will be unveiled at the end of October.
