House prices: Fastest growth in two years with the North outperforming the South

The North West was the second top scorer in the table with a five per per cent rise in values year on year in the third quarter covering July, August and September, while Scotland saw a 4.5 per cent gain and Yorkshire 4.4 per cent, making it fourth in the table. This takes the average Yorkshire house price to £206,493.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “UK house prices increased by 0.7% in September, after taking account of seasonal effects. This resulted in the annual rate of growth rising from 2.4% in August to 3.2% in September, the fastest pace since November 2022 (4.4%). Average prices are now around 2% below the all-time highs recorded in summer 2022.

“Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.

“Our regional house price indices are produced quarterly, with data for Q3 (the three months to September) indicating that most regions saw a pickup in annual house price growth. Northern Ireland remained the best performer by some margin, with prices up 8.6% compared with Q3 in 2023. Scotland saw a noticeable acceleration in annual growth to 4.3% (from 1.4% in Q2), while Wales saw a more modest 2.5% year-on-year rise (from 1.4% the previous quarter).

“Across England overall, prices were up 1.9% compared with Q3 2023. Northern England,comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands, continued to outperform southern England, with prices up 3.1% year-on-year. The North West was the best performing English region, with prices up 5.0% year-on-year.

“Southern England, whch is South West, Outer South East, Outer Metropolitan, London and East Anglia, saw a 1.3% year-on-year rise. London remained the best performing southern region with annual price growth of 2.0%. East Anglia was the only UK region to record an annual price fall, with prices down 0.8% year-on-year.”

Nationwide’s most recent data by property type shows that terraced houses have seen the biggest percentage rise in prices over the last 12 months, with average prices up 3.5%. Semi-detached and flats saw increases of 2.8% and 2.7% respectively, while detached houses saw more modest growth of 1.7%.

However, Robert Gardner adds: “If we look over the longer term, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since the first quarter of 2020, the price of an average detached property increased by nearly 26%, while flats have only risen by around 15% over the same period.”