Why homeowners are happy but buyers worried about house price revelations despite sluggish Scottish growth

August’s small monthly rise comes after a faster 0.9 per cent increase in July, but year-on-year prices are up 4.3 per cent, Halifax added, the strongest rate since November 2022.

Scotland saw a more modest rise in house prices, where a typical property now costs £205,144, 1.7 per cent more than the year before.

Amanda Bryden, head of mortgages at Halifax, said: “Recent price rises build on a largely positive summer for the UK housing market.

“Prospective homebuyers are feeling more confident thanks to easing interest rates.

“That optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years.”

The average property is just £1,000 short of the record price set in Halifax’s house price index of £293,507 in June 2022.

Bryden continued: “While this is welcome news for existing homeowners, affordability remains a significant challenge for many potential buyers still adjusting to higher mortgage costs.

“However with market activity picking up and the possibility of further interest rate reductions to come, we expect house prices to continue their modest growth through the remainder of this year.”

It comes after the Bank of England voted to cut the base interest rate by a quarter point at the start of August to 5 per cent, which some experts said has given buyers more confidence.

The strongest growth came in Northern Ireland, which saw house prices rise 9.8 per cent annually. Wales also came in at 5.5 per cent.

The most expensive average properties were still found in London, now averaging £536,056, up 1.5 per cent on a year ago.

Jeremy Leaf, north London estate agent and industry veteran, called the figures “solid, not spectacular”.

Mark Harris, chief executive of mortgage broker SPF Private Clients, added that the mortgage market “remains volatile”.

He added: “However, unlike a few months ago, the difference now is that mortgage rates are falling rather than rising, which is good news for affordability.”

Nathan Emerson, chief executive at Propertymark, said: “It is always encouraging to see enhanced levels of consumer confidence within the housing market, and we now appear to be firmly following a positive trend of growth once again.

“It is reassuring to witness the market moving forward from what has been a very fluid few years, where household affordability has been at near breaking point for many people.

“As the benefits of lower inflation and interest rates fully start to bed in, Propertymark is confident there will be further market growth as the year plays out.”

Emerson added: “We are, however, keen to see the UK Government’s housebuilding programme spring into action to help alleviate the ongoing mismatch between supply and demand, as it is essential to keep pace with an ever-growing population.”