In September the price of an average property rose by 0.3%, which is the same increase seen in August.
Halifax said the high annual growth, which means a typical property is now worth £293,399, is down to the fact prices were weaker a year ago.
Amanda Bryden, head of mortgages, Halifax, said: “It’s essential to view these recent gains in context.
“While the typical property value has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months. Looking back two years, prices have increased by just 0.4% (£1,202).
“Market conditions have steadily improved over the summer and into early autumn. Mortgage affordability has been easing thanks to strong wage growth and falling interest rates.
“This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.”
Looking ahead, Bryden said the cost of housing remained a challenge for many buyers. And, as such, she expected any growth in house prices over the rest of the year to be ‘modest’.
With the Bank of England governor Andrew Bailey hinting last week interest rates would fall again if inflation continued to decrease there has been more positivity. Indeed, the comments by Bailey led to lenders making further mortgage rate cut.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “For now, optimism is back with the housing market in better health than a year ago when mortgage rates were still alarmingly high.
“Lenders are continuing to trim their home loan costs, with more sub-4% deals available on both two-and-five-year fixes and a raft of cuts targeting first-time buyers, so those shopping around for a new deal are likely to be feeling more optimistic.”
Meanwhile, Karen Noye, mortgage expert at Quilter, reminded borrowers or those looking at buying for the first time, of the forthcoming Budget – the first from the new Labour government and Chancellor Rachel Reeves.
“The broader expectation is that the Bank of England may continue to adjust rates downwards,” she said. “Even so, with the October Budget looming, any significant fiscal changes could influence mortgage affordability, leaving buyers cautious.
“But the current landscape for mortgages is helping to drive house prices up but the market remains fragile, and any economic hiccup could stall or reduce prices once again.”
