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The average cost of a UK home stood at £266,400 in July, according to property portal Zoopla, which said the price had risen 1.4% in the first seven months of the year.
This equated to an increase of £3,600 since the beginning of the year.
This is compared to a 0.1% rise for the same period in 2023. House prices were now on track to be 2.5% higher over 2024, according to Zoopla.
Buyer demand was a fifth higher compared to a year ago, and new sales agreed rose by nearly a quarter.
The Bank of England’s (BoE) interest rate cut at the beginning of August has not had a material impact on buyer demand, Zoopla said.
The Bank of England lowered rates from 5.25% to 5% — the first cut since March 2020. Higher interest rates dampened consumer sentiment, as it has led to increased borrowing costs, including mortgage rates.
Read more: Andrew Bailey brings hopes of more interest rate cuts but warns ‘the job is not completed’
Buyer demand fell in summer 2023 as a result of the spike in mortgage rates, a factor in the year-on-year rise seen last month.
The supply of homes for sale currently stands at a seven-year high. Zoopla said it expected greater choice for buyers would help keep house price inflation in check over the rest of 2024 and into 2025.
The property platform warned that record levels of supply meant sellers needed to be careful when it came to pricing as homes that need a cut in asking price take more than twice as long to sell than those without a price reduction. One in five sellers lowered their asking price by 5% or more in August.
Richard Donnell, executive director at Zoopla, said: “Momentum in the sales market continues to build as mortgage rates drift lower and more and more sellers gain the confidence to list their home for sale.”
“Buyers have less purchasing power than two to three years ago and remain price sensitive meaning sellers can’t afford to get ahead of themselves on where to set the right price for their home.”
Read more: What you need to know before buying a second home
Sarah Coles, head of personal finance at Hargreaves Lansdown, said there is a “real risk in getting carried away and over-pricing your home.”
“There’s so much on the market that buyers can take their pick, and at the same time, the fact prices are so high and mortgages remain relatively expensive means they face a real stretch to buy pricier homes,” she added. “Anything that’s too expensive will be kicked to the kerb.”
Across the UK, Belfast saw the largest percentage increase in house prices year-on-year in July, up 5.1% to £176,700. Manchester saw the second biggest percentage increase, rising 2% to £226,600.
Meanwhile, the typical cost of a home in London only saw a slight increase of 0.2%, but the price remained well above the UK average at £536,300.
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