British house prices surged in September, marking the fastest annual rise since November 2022, according to data from mortgage lender Halifax. The uptick in property prices has been driven

by expectations of further reductions in borrowing costs, giving momentum to the housing market.

Halifax reported a 4.7% increase in annual property prices, up from 4.3% in August. However, this figure fell short of analysts' forecasts, which had anticipated a 5.2% rise.

On a monthly basis, house prices increased by 0.3% in September, mirroring the growth rate observed in August. A Reuters poll of economists had predicted a slightly higher increase of 0.4%.

"Mortgage affordability has improved due to strong wage growth and declining interest rates, boosting confidence among potential buyers," said Amanda Bryden, head of mortgages at Halifax. "While this improved affordability is expected to continue supporting buyer activity, housing costs remain a challenge for many."

Other indicators also suggest a revival in the UK property sector. Nationwide, another major mortgage lender, reported the fastest annual pace of house price growth since November 2022 in its own September data.

Most economists surveyed by Reuters anticipate that the Bank of England will lower interest rates at its next meeting in November, following its decision to hold borrowing costs at 5% in its most recent session.

Prime Minister Keir Starmer’s Labour government, which secured a landslide victory in the July elections, has pledged to reform the planning system to increase construction. The government has set mandatory targets to accelerate house-building, but the ongoing shortage of homes is expected to continue driving up prices in the medium term.