House prices in the UK increased by 3.9% annually in October, easing from 4.6% growth in September, Halifax has found.

The bank’s house price index revealed that prices increased by 0.2% month-on-month, the fourth consecutive monthly rise.

In October, the average property price stood at £293,999, surpassing the previous peak of £293,507 in June 2022.

Head of mortgages at Halifax, Amanda Bryden, said: "That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place.

"Despite the affordability challenge, market activity has been improving. The number of new mortgages agreed recently reached its highest level in two years. This aligns with average mortgage rates dropping steadily since spring - now over 160 basis points lower than in summer 2023 – coupled with continued positive income growth."

Northern Ireland continued to see the strongest property price growth out of the four nations of the UK, with prices increasing by 10.2% annually, standing at £204,242.

Prices in Wales (£225,543) and Scotland (£206,480) increased by 5.6% and 1.9%, respectively.

In England, the North West was the best performing region, with house prices increasing by 5.9% year-on-year. The average price now stands at £235,587.

London remained the most expensive region to buy a property in the UK, where house prices have increased annually by 3.5% to £543,308.

Despite these increases, personal finance analyst at Bestinvest, Alice Haine, has warned of future concerns following the Budget last month.

She stated: "Despite easing mortgage rates over the past year, robust wage growth and the prospect of further interest rate cuts to come this year, Budget uncertainty was a major worry for buyers and sellers in the run-up to the new Labour Government’s first fiscal statement. Property viewings dipped towards the end of the month, as some buyers adopted a wait-and-see attitude to assess the fallout from any major changes.

"The Budget was not the only factor dampening price growth in October. The post-election rush of listings in the early Autumn, further fuelled by the cut in interest rates at the start of August, means that buyers now have a wider selection of homes to choose from and can negotiate harder on price.

"Whether prices will be impacted by the Chancellor’s Autumn Budget measures remains to be seen. In the wake of the Budget, some economists warned that Reeves’ spending and borrowing binge could prove inflationary and potentially keep interest rates higher for longer."

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