Annual house price growth rises by 2.9% as hopes of imminent interest cut fade

Annual house price growth accelerated to 2.9% in September, according to official figures.

The Office for National Statistics (ONS) stated that the average property value across the UK is £292,000. The ONS estimated that the annual pace of price growth increased from 2.7% in the year to August.

In the 12 months leading up to September 2024, average rose in England to £309,000 (a 2.5% annual increase), in Wales to £217,000 (0.4%), and in to £198,000 (5.7%).

The average house price for Northern Ireland was £185,000 between April and June, marking a 6.4% increase from the previous year. These figures were released as the ONS announced that Consumer Prices Index (CPI) inflation accelerated to 2.3% in October, up from 1.7% in the previous month.

Economists had predicted an inflation increase of 2.2%, making this higher than expected. David Hollingworth, associate director at L&C Mortgages, commented on the jump in inflation, stating it could "bring further for mortgage borrowers".

He added: "Although the rate lifting above target is not a shock, at 2.3% it is a little higher than many had expected. That will pour more cold water on the prospects for another cut to (the Bank of England) base rate to come next month, which will be disappointing news for those on a variable or tracker rate mortgage."

Mortgage expert Mr Hollingworth has noted a recent uptick in fixed rate mortgages, cautioning that this trend is linked to gloomier expectations around interest rates: "Those increases are due to the less optimistic forecast for interest rates and today’s figures will do nothing to change that.

"Although still expected to fall, the growing expectation has been for rates to fall more slowly and not as far as previously anticipated."

Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners said: "Homeowners and first-time buyers are likely to be disheartened by the latest inflation reading, as it reduces the likelihood of a third rate cut this year."

She added, "The average cost of a new fixed rate mortgage has been creeping up since the , as lenders price their products to reflect expectations that interest rates may stay higher for longer."

The inflation update seems dire for mortgage payers according to Haine, who warned that "mortgage borrowers could have more pain to contend with if more lenders adjust their rates upwards" following an inflation surge above the Bank of England’s 2% target.

SPF Private Clients' CEO Mark Harris pointed out that any further reduction in rates could be on the horizon, albeit possibly next year: "Further rate reductions are more likely next year than this one, with swap rates rising on the back of today’s inflation figures.

"However, while inflation rose more than expected, it’s still only just above the 2% target and fluctuations are not unexpected."

Nick Leeming, chairman of Jackson-Stops estate agents, has noted: "Despite the base rate being cut to 4.75%, this reduction is not yet feeding through into mortgage rates due to external headwinds.

"But the market should take confidence from the fact that activity levels are up year-on-year."

On the rental front, ONS data revealed UK private rents soared by 8.7% in the 12 months up to October, slightly edging past September's 8.4% annual spike, albeit still shy of March's record-setting 9.2%.

Sarah Coles, personal finance guru at Hargreaves Lansdown, said: "Getting good news about your rent is about as common as discovering your housemates have washed up for you, or your landlord suggesting you get a dog.

"It means for many, the only way out of the endless cycle of rising costs is to buy, but this is far easier said than done when rents absorb so much of your income."

Nathan Emerson, CEO at Propertymark conveyed: "Selling up altogether or turning to the short-term letting market is becoming a more attractive option for landlords owing to the onerous legislative changes and increased financial liabilities they encounter."