September has seen the fastest annual house price growth in around two years, according to an index.

UK house prices increased by 0.7% in September, Nationwide Building Society said.

This resulted in the annual price growth rate accelerating from 2.4% in August to 3.2% in September, the fastest pace since November 2022 when there was a 4.4% rise.

The average UK house price in September is £266,094.

Property values in Northern Ireland performed the most strongly for annual growth in the third quarter of this year, with prices up by 8.6% year-on-year, Nationwide said.

East Anglia was the weakest performing region, with prices down by 0.8% over the year.

Robert Gardner, Nationwide’s chief economist, said: “Average prices are now around 2% below the all-time highs recorded in summer 2022.

“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.

“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.”

He continued: “Scotland saw a noticeable acceleration in annual growth to 4.3% (from 1.4% in the second quarter), while Wales saw a more modest 2.5% year-on-year rise (from 1.4% the previous quarter).

“Across England overall, prices were up 1.9% compared with (the third quarter of) 2023.

“Northern England (comprising North, North West, Yorkshire and the Humber, the East Midlands and West Midlands), continued to outperform southern England, with prices up 3.1% year-on-year.

“The North West was the best performing English region, with prices up 5.0% year-on-year.

“Southern England (the South West, Outer South East, Outer Metropolitan, London and East Anglia regions) saw a 1.3% year-on-year rise.

“London remained the best performing southern region with annual price growth of 2.0%.”

Average prices are now around 2% below the all-time highs recorded in summer 2022

Mr Gardner said Nationwide’s most recent data by property type indicates terraced houses have seen the biggest percentage rise in prices over the past year, with average prices up by 3.5%.

Semi-detached and flats saw increases of 2.8% and 2.7% respectively. Whilst detached houses recorded growth of 1.7%.

Mr Gardner added: “If we look over the longer term however, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic.

“Indeed, since (the first quarter of) 2020, the price of an average detached property increased by nearly 26%, while flats have only risen by (around) 15% over the same period.”

Sarah Coles, head of personal finance, Hargreaves Lansdown said: “These aren’t runaway price rises, but they’re firmly positive, which always helps boost buyer sentiment and keep the wheels rolling on the property bandwagon.”

Iain McKenzie, chief executive of the Guild of Property Professionals, said: “House prices usually remain robust at this time of the year, as there is still time to buy, complete and move in before Christmas.”

Guy Gittins, chief executive of estate agent Foxtons said: “We’re already seeing more inquiries made, more offers submitted and more sales agreed, all of which bodes very well for the remainder of the year and beyond.”

Jeremy Leaf, a north London estate agent said: “The market has changed and demand is improving which has coincided with lower mortgage rates and a more settled picture for inflation and politics.

“This shift has resulted in more appraisals, listings, offers and firming pricing.”

Verona Frankish, chief executive of Yopa said: “The base rate still remains significantly higher than we’ve seen in recent years and whilst buyers are returning with confidence, we’re not quite out of the woods yet with respect to transactional volumes, which still remain someway off the previous pace.”

We are starting to see lenders introduce improved competitive offerings when it comes to mortgage deals

Marc von Grundher, director of Benham and Reeves, said: “The property market has continued to prove its resilience, with house prices now increasing at their fastest rate in two years and climbing close to historic record highs.”

Nathan Emerson, chief executive of property professionals’ body Propertymark, said: “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.”

Holly Tomlinson, a financial planner at wealth manager Quilter said: “The Bank of England’s recent move to hold the base rate steady, while not transformative to mortgage rates, does continue to provide stability to the market and will continue to help more competitive mortgage deals re-enter the market.

“Lenders are competing to attract custom, and a more stable environment is likely to mean they go further with rate cuts.”

Matt Thompson, head of sales at estate agent Chestertons, said: “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 Garrington Property Finders, said: “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.

“This split reveals that while buyer appetite is strong, many buyers remain highly price sensitive and value is key.”

Here are average prices in the three months to September and the annual change, according to Nationwide Building Society:

Northern Ireland, £196,197, 8.6%

North West, £215,807, 5.0%

Scotland, £184,471, 4.3%

Yorkshire and the Humber, £206,493, 4.3%

North East, £161,066, 3.2%

Wales, £207,113, 2.5%

London, £524,685, 2.0%

Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £424,345, 1.9%

East Midlands, £232,390, 1.8%

West Midlands, £243,599, 1.0%

South West, £303,522, 0.6%

Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £336,253, 0.6%

East Anglia, £270,906, minus 0.8%