UK house prices in September were 3.2% more than a year ago – the fastest rate for nearly two years, says the Nationwide.

The building society said that annual growth was the highest since November 2022, with terraced homes driving the increase. It said rising incomes and mortgage rate cuts were improving affordability for buyers.

“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,” said Nationwide’s chief economist, Robert Gardner.

“These trends have helped to improve affordability for prospective buyers.”

However activity remains subdued compared with historical standards.

Northern Ireland remained the strongest performing housing market with prices up 8.6% on the same period in 2023. House prices in Scotland accelerated to 4.3%, up from 1.4% in April-June, while Wales saw a more modest 2.5% year-on-year rise.

Across England overall, prices rose 1.9%compared with the same period of 2023 but homes the North, North West, Yorkshire and the Humber, the East Midlands and West Midlands continued to outperform southern England, with prices up 3.1%.

Gardner adds:  “The North West was the best performing English region, with prices up 5.0 per cent. Southern England (the South West, Outer South East, Outer Metropolitan, London and East Anglia regions) saw a 1.3 per cent year-on-year rise.

“London remained the best performing southern region with annual price growth of 2%.”

Nathan Emerson, chief executive of agency body Propertymark, says: “As 2024 has progressed, it has been extremely positive to see a firm trend of growth emerge across the year within the housing market.

“We have seen the economy settle down to a position that provides far greater consumer confidence and although we are still at the very start of the journey regarding base rates, we are starting to see lenders introduce improved competitive offerings when it comes to mortgage deals, which is a firm foundation for confidence and growth over the coming months.”