But prices remained 0.8% lower than a year ago and 2.3% below the level at the start of summer.
Buyer demand was still 9% lower than this time last year. Sales agreed were also 9% lower year-on-year, despite the seasonal pick-up in activity.
The number of homes available for sale is at a 12-year high, resulting in a “crowded market”.
Colleen Babcock, property expert at Rightmove, said: “September’s above-average price rise is a welcome sign of confidence after a particularly subdued summer, but it should be viewed as a modest recovery rather than a major turning point. Property prices have largely underperformed against the long-term average this year, but September is an exception.
“While buyers and sellers are returning to the market after the summer holidays to potentially fuel an autumn bounce, sellers face stiff competition from a 12-year-high number of other homes for sale.”
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Northern regions continue to outperform
The North East experienced annual growth of 2.7% to £199,973. The North West followed with growth of 1.7% year-on-year to £274,774. Both were the quickest English markets to secure buyers at 55 and 57 days, respectively.
Scotland topped the growth tables, proving more liquid than other UK market.
It recorded the largest monthly increase in the UK at 3.8% and the strongest annual growth at 4.2%. Scotland also had the fastest sales market, with an average of just 33 days to find a buyer.
London posted a reasonably strong 1.8% monthly rise, the second-highest after Scotland. However, annual prices remained 2.6% lower, at £657,775.
It also took an average of 78 days to find a buyer, the slowest market in Great Britain.
Buyers ‘grapple’ with affordability
Areas with average asking prices below £300,000 were generally continuing to record annual growth.
Jeremy Leaf, estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, commented that he was witnessing continued affordability pressures.
“Affordability concerns remain, prompted by rising inflation and mortgage rates, as well as fear as to what might be in store in next month’s Budget,” he said.
Ian Harris, President of NAEA Propertymark, said: “A slower market can provide greater choice and more opportunity to take time over a purchase, but affordability remains central to what [buyers] can realistically achieve.”
