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UK House Prices Jump Most in Over Two Years, Halifax Says - BLOOMBERG
(Bloomberg) -- UK house prices soared by the most in over two years after an end to budget uncertainty, an interest-rate cut and low unemployment boosted buyer demand, according to one of the country’s biggest mortgage lenders.
Halifax said the average home price rose 1.3% to a new record high of £298,083 ($379,830), the fifth consecutive monthly gain and the biggest increase since June 2022. Prices were 4.8% higher than a year earlier.
The figures chimes with rival lender Nationwide Building Society, whose own measure showed prices rose 1.2% last month, the sharpest increase since early 2022. Bank of England data also showed mortgage approvals hitting their highest in over two years in October.
The data suggest that homebuyers shrugged off concerns over the Labour government’s first budget, buoyed by a tight jobs market and the Bank of England cutting interest rates for only the second time this year.
“As we move towards the end of the year and into 2025, positive employment figures and anticipated decreases in interest rates are expected to continue supporting demand,” said Amanda Bryden, head of mortgages at Halifax.
“This should underpin further house price growth, albeit at a modest pace as borrowing costs remain above the average of a few years ago,” she said.
Chancellor Rachel Reeves’ budget spared households from most of the pain from her £40 billion of tax rises, which were mainly shouldered by businesses. Homebuyers also received a psychological boost after the BOE pressed ahead with another interest-rate cut last month.
The property market may face some headwinds from mortgage rates creeping higher since the expansionary budget after investors bet on gradual cuts by the BOE going forward.
Moneyfacts data suggests the average two-year fixed mortgage rate climbed to 5.5% on Thursday, up from 5.39% before the Oct. 30 budget. It is still lower than in the summer when it was almost 6%.
Tom Bill, head of UK residential research at Knight Frank, cautioned that the impact of the budget “is still in the post for the UK housing market.”
“An increase in borrowing costs and the disappearance of sub-4% mortgages in recent weeks means we expect downwards pressure on house prices to intensify next year,” he said.
Halifax said prices were up most on an annual basis in Northern Ireland and the North West of England. In London, prices were 3.5% higher, among the weakest of any region.
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