Average UK house price highest on record in September - Halifax

The average house price in the UK hit its highest on record in September, underpinned by a shortage of homes, according to data from lender Halifax.

House prices rose 4% in the three months to September compared to a year ago, up from a 2.6% increase in August and putting the average house price at £225,109, which is the highest on record. Economists had expected a smaller gain of 3.6%.

Prices in the last three months were up 1.4% on the previous quarter, marking the fastest price growth since February. Meanwhile, prices rose 0.8% between August and September following a 1.5% jump in August and versus expectations for a 0.1% rise.

Russell Galley, managing director at Halifax Community Bank, said: "While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year. UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment.

"However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand. There has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The sudden surge in Halifax’s measure of house prices- up 3% over the last three months alone - is impossible to reconcile with all the other housing market evidence. Halifax’s measure is the most volatile of all the indices we track; the standard deviation of month-to-month changes over the last four years has been two and three times higher than for the official and Nationwide indices, respectively.

"Other surveys show that the pipeline of demand is soft; RICS has reported that new buyer enquiries have fallen in six of the last seven months. Real wages still have further to fall over the next six months and mortgage rates will rise soon in response to the increase in banks’ funding costs. Meanwhile, the decline in Rightmove’s measure of year-over-year growth in online asking prices to just 1.1% in September, from 3.1% in August, indicates that sellers have little pricing power. As such, we expect most of the pickup in Halifax’s index to unwind over the coming months."

North London estate agent and former RICS residential chairman, Jeremy Leaf, said: "Once again, the market has proved its resilience and confounded the doom mongers. Not that there is too much to get excited about with these figures which confirm what we have seen at the coalface recently - that prices are holding up reasonably well where vendors are realistic, partly in response to a continuing shortage of stock.

"Sadly, we are not seeing the hoped-for autumn bounce but a steady market is more than welcome with so much uncertain economic news."