House prices rose at the fastest pace in more than two years, according to the latest figures from Nationwide.

The average home has increased in value by 3.2 per cent over the past 12 months after a 0.7 per cent rise in the month of September.

Britain's biggest building society says this is the fastest annual growth recorded since November 2022. 

The average house price is now roughly 2 per cent below the all-time highs recorded in summer 2022.

Robert Gardner, chief economist at Nationwide said that rising incomes combined with falling mortgage rates were helping to drive prices higher.

'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 Gardner.

'These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.'

The extent of house price gains continues to vary across the country.

In particular, prices in the North West of England are up 5 per cent year-on-year while Northern Ireland has recorded 8.6 per cent growth and Scottish house prices are up 4.3 per cent.

Meanwhile, southern England has only seen a 1.3 per cent year-on-year rise while East Anglia was the only UK region to record an annual price fall, with prices down 0.8 per cent year-on-year.

Property market set for busy autumn 

Matt Thompson, head of sales at Chestertons estate agents, feels a combination of pent-up demand, more affordable mortgage rates and fears about a Labour capital gains tax grab will make for a busy autumn across the property market.  

'Pent-up demand, lower interest rates and sub-4 per cent mortgage rates resulted in more house hunters entering the market in September,' said Thompson.

'In response to the uplift in buyer activity, and with looming changes to capital gains tax in the upcoming Autumn Budget, we have also seen more sellers putting their property up for sale. 

'We expect September's level of market activity to continue in October but sellers will review their position following the Autumn Budget whilst some buyers await the next Bank of England announcement on interest rates in November.'

Jonathan Hopper, chief executive of agent Garrington Property Finders said: 'House prices have finally climbed out of the Truss trough. 

'While the national average is still 2 per cent below the all-time high recorded just before the disastrous mini-Budget of two years ago, the direction of travel is clear.

'Yet the pace of the recovery still varies considerably by region. Prices are rising fastest in more affordable locations and there's a clear north-south divide.'