House prices rise for the fifth month in a row: where are they rising the fastest?

House prices rose for the fifth month in a row in June, according to the latest figures from the Office for National Statistics.

The average house price rose by 2.7 per cent, with the average home selling for around £288,000.

In cash terms, this means the average house price has risen by £8,000 compared to 12 months earlier.

The ONS figures lag slightly behind other house price indices, but are considered more accurate as they are based on completed sales.

Between May and June alone, the average house price rose by 0.5 percent, with house prices highest in Northern Ireland and Yorkshire and the Humber.

Marc von Grundherr, director at estate agents Benham and Reeves, said: ‘Five consecutive months of positive monthly house price growth shows that the UK housing market is recovering strongly from the period of stagnation caused by higher mortgage rates.

‘Buyers are acting with more confidence and this confidence will only grow as interest rates begin to fall. We therefore expect a very strong end to the year, both in terms of buyer activity and the resulting increase in property values.’

Lower mortgage rates lead to higher house prices

Falling mortgage rates are thought to be the main factor driving up house prices.

The Bank of England cut its base rate from 5.25 percent to 5 percent earlier this month, sparking a wave of mortgage rate cuts. A number of lenders are now offering five-year fixed rates below 4 percent.

However, today’s house price figures were accompanied by news that inflation is back above the Bank of England’s inflation target of 2.2 percent.

This means that the average price of goods and services is now 2.2 percent higher than last year.

However, the increase was smaller than expected and economists and commentators pointed out that it would have little impact on the direction of interest rates.

Peter Stimson, head of product at MPowered Mortgages, said: ‘Although inflation has risen, it is unlikely that this will have an impact on mortgage rates as this is already factored into the price.’

Where are house prices rising the most?

House prices have risen in all regions of the UK compared to 12 months ago.

In the 12 months to June, house prices in Northern Ireland rose by an average of 6.4 per cent, while in Scotland house prices rose by 4.3 per cent.

Meanwhile, England and Wales saw more modest house price growth of 2.4 percent and 1.8 percent year-on-year respectively.

However, the monthly picture shows differences. In Northern Ireland, house prices rose by 3.6 per cent last month, while prices in Yorkshire and The Humber rose by 2.7 per cent.

However, average house prices in the East Midlands fell by 0.5 per cent and in the south west of England prices fell by 1 per cent between May and June.

The type of property also affects house prices. For example, semi-detached homes have risen in price by 4 per cent in the last 12 months, from £269,998 to £280,895.

However, the average price of an apartment or maisonette only rose by 0.5 percent during that period.

Jonathan Hopper, managing director of buying agent Garrington Property Finders, said: ‘National averages often mask some of the variation that arises when there are more enthusiastic, but also price-sensitive, buyers.

‘Price increases are currently greatest in areas considered to be highly valuable, but in the least affordable areas price growth is still modest.

“Even in traditionally good neighborhoods, only the very best properties sell for full asking price.”

How accurate is the ONS house price data?

The ONS house price data is broadly consistent with what we see in the house price figures from both Nationwide and Halifax, based on their mortgage data.

According to Halifax, home prices rose 2.3 percent year-on-year, the highest level reached so far in 2024.

According to Nationwide, house prices rose by 2.1 per cent in the 12 months to July, the largest annual increase recorded in the past 18 months.

However, the ONS data lags behind other sets of house price data, as it is based on sales prices from the Land Registry.

This means that prices are reflected in the month before the general election and well before the Bank of England’s base rate cut this month.

Buying agent Jonathan Hopper believes house prices could rise further in the coming months as interest in buying increases.

He said: ‘ONS data is rather sepia-toned and does not reflect the subsequent rebound in buyer confidence.

‘Buyer demand has increased and the market has become busier, although the market is still not running at full speed due to the summer holidays.

‘The crucial thing is that borrowing costs have fallen following the Bank of England’s decision two weeks ago.

‘Thousands of potential buyers who put off their moving plans for months or even years are now asking themselves, ‘If not now, when?’