According to Nationwide, this was slightly higher than the 2.1% year-on-year growth recorded in August. On a monthly basis, average house prices were relatively flat at 0.5%, an improvement on last month’s decline of 0.1%.
Robert Gardner, chief economist at Nationwide, said the annual pace of house price growth was “little changed” in September.
He added: “The broad stability in the annual rate of house price growth over the past three months mirrors that of activity. The number of mortgages approved for house purchase has been hovering at around 65,000 cases per month, close to the pre-pandemic average – despite the higher interest rate environment.”
Gardner continued: “Despite ongoing uncertainties in the global economy, underlying conditions for potential homebuyers in the UK remain supportive.
“Unemployment is low, earnings are rising at a healthy pace, household balance sheets are strong, and borrowing costs are likely to moderate a little further if bank rate is lowered in the coming quarters as we, and most other analysts, expect.
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“Providing the broader economic recovery is maintained, housing market activity is likely to strengthen gradually in the quarters ahead.”
House prices in Northern Ireland jump in Q3
In Q3, the strongest house price inflation was seen in Northern Ireland, at a rate of 9.6% to average £215,122.
In Wales, there was an increase of 3% to £213,359, up from 2.6% in Q2, while growth in Scotland slowed from 4.5% to 2.9%, with average values at £189,863.
House price growth also slowed in England, from 2.5% in Q2 to 1.6% in Q3, averaging £309,858. Regionally, there was a 3.4% uplift in prices in Northern England, while Southern regions decelerated to 0.7%.
Budget uncertainty dampening plans
Property professionals noted that the small growth seen in September was positive and a sign of resilience, while others suggested that the market had softened due to speculation around property tax changes in the upcoming Autumn Budget.
Amy Reynolds, head of sales at estate agency Antony Roberts, said: “With the summer market now out of the way, which was surprisingly resilient given continued caution demonstrated by buyers, many are now waiting for what the Budget might bring.
“That said, well-priced property continues to sell, and the gap between serious buyers and committed sellers has narrowed. Stock levels remain constrained in some areas, keeping competition strong for the best homes.
“In my view, if you have the money and can afford and want to move now, then it is a good time to proceed when you are less likely to be competing for a property and subject to sealed bids.”
Matthew Thompson, head of sales at estate agency Chestertons, added: “September has been a challenging month as many buyers paused their decisions ahead of the November Budget.
“Uncertainty over potential tax changes is holding back activity, but if the announcements bring clarity, confidence could return quickly and create an unusually busy end to the year.”
Tanya Elmaz, managing director of intermediary sales at Together, said: “A return in positive house price growth is a welcome sign following a few quiet summer months. The question of whether this growth is set to last, however, remains in doubt.”
Elmaz said the settling of interest rates was also affecting activity, as some people wanted more attractive rates.
She added: “The property industry also remains in the dark over potential changes in the tax regime at the Autumn Statement. While rumoured tax changes, such as a potential property tax on houses worth over £500,000, will significantly affect the market, the uncertainty over what’s to come may keep activity subdued until more clarity is provided in the Budget.”
