UK house prices rose for the third month in a row in September, coming within £100 of a record high. The increase was supported by rising wages and a reduction in interest rates, which have made mortgages more affordable for some homebuyers, according to Halifax, the UK’s largest mortgage lender.

Halifax's data shows that home prices edged up by 0.3% last month, matching the monthly growth recorded in August. This marks a continuation of the upward trend that began in July, pushing the average UK home price to £293,399—just £108 short of the all-time high set in June 2022, prior to the economic turmoil triggered by the former prime minister Liz Truss's mini-budget.

On an annual scale, house prices grew by 4.7%, slightly up from the 4.3% seen in August, marking the fastest growth rate since November 2022.

The housing market has been bolstered by the Bank of England's recent decision to cut interest rates in August for the first time in over four years, bringing them down from 5.25% to 5%. This move has ignited competition amongst mortgage lenders, leading many to reduce their rates to attract more customers after a period of slower market activity.

Some lenders, like Nationwide, have even increased the borrowing limits for first-time buyers, allowing them to secure mortgages up to six times their annual earnings in an effort to draw in new clients.

"Market conditions have been steadily improving over the summer and into early autumn," said Amanda Bryden, Head of Mortgages at Halifax. "Stronger wage growth and lower interest rates have made mortgages more affordable, boosting buyer confidence. The number of mortgages agreed upon has risen by more than 40% over the past year, reaching the highest levels since July 2022."

However, Bryden cautioned that these improvements are unlikely to significantly change the situation for most prospective buyers, who still face affordability barriers. She predicted that property prices would remain relatively stable into 2025.

"Although better mortgage affordability is expected to support buyer activity, especially with further interest rate cuts anticipated, housing costs will remain a significant challenge. We expect price growth to stay modest through the rest of this year and into the next," Bryden added.

Challenges for young homebuyers are highlighted in separate research by Hamptons, which reveals that average mortgage payments for Generation Z—those born in the late 1990s—are set to be nearly double what previous generations paid when buying their first homes. The current average stands at £1,739 per month for Generation Z, compared to £863 for millennials, £923 for Generation X, and £775 for baby boomers.

The disparities are driven by consistent house price inflation and varying interest rates at the time of purchase.