What’s going on here?
Data out on Monday showed that UK house prices rose in September for the third month in a row, which will have homeowners dancing to the beat.
What does this mean?
According to data from British bank Halifax, the average house price in the UK rose 0.3% in September versus August – to just shy of £294,000, or $385,000. That’s almost 5% higher than the same time last year. Analysts think that’s partly down to the rolling stone of August’s Bank of England interest rate cuts. They’ve made it cheaper to borrow money, so those looking to buy have been encouraged to get into the market, helping push up house prices. Case in point: the number of mortgages agreed is up by more than 40% in the last year, and is now at its highest level since July 2022.
Why should I care?
For markets: Economics in action.
Economists are predicting further interest rate cuts in the UK, and that’ll make mortgages even more affordable. In turn, that should mean more folk looking to splash out on homes. But, of course, building more houses takes time and there’s a shortage of them in the UK. So in the meantime, real estate experts are predicting that property prices will keep rising for the rest of this year and into early next.
The bigger picture: Home is where the heart (of the economy) is.
Rising house prices in the UK should make waves in the economy. See, when folks’ homes rise in value, they feel better off. And that’s good for two reasons. One is that people will fork out for things they want but don’t necessarily need, giving a helping hand to consumer-facing goods and services businesses. Another is that people tend to invest more in their homes through things like DIY or renovations, hoping to increase their property values further – and that stands to benefit home improvement firms, like B&Q-owner Kingfisher.
