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British house prices rose by the most six months in July, according to figures published on Wednesday by mortgage lender Halifax that suggested fresh momentum in the property market.
House prices increased by an annual 2.3%, the biggest yearly increase since January. The last time prices rose by more on an annual basis was February 2023 when they rose by 2.5%.
On a monthly basis, prices jumped by 0.8% in July from June, Halifax said. Economists polled by Reuters had mostly expected an increase of 0.3% on the month.
The Labour Party, which secured a landslide win in last month's parliamentary election, has promised to reform Britain's planning system and it has set out mandatory targets to speed up home-building, but the shortage of supply is likely to remain a factor driving house prices for the medium term.
Furthermore, last week the Bank of England cut rates to 5% from a 16-year high of 5.25%, its first cut since March 2020.
"Against the backdrop of lower mortgage rates and potential further Base Rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year," Amanda Bryden, Halifax's head of mortgages, said.
"However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners."
Other gauges of the housing market have also shown momentum picking up.
Last week, rival mortgage lender Nationwide said its measure of house prices rose by 2.1% in the 12 months to July, the biggest annual increase since December 2022.
Mortgage rates surged when then Prime Minister Liz Truss's economic plan caused a bond market slump in September 2022. Borrowing costs have since largely stabilised, although they remain nearly double their level before the turmoil and a rise in benchmark interest rates.
Investors are currently putting a roughly 33% chance on the BoE lowering Bank Rate by another quarter point at its next meeting in September.
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