UK house prices post first annual gain in 14 months as AI valuation models flag the turning point

UK house prices rose 1.2% year on year last month, the first annual gain in fourteen months, as easing mortgage rates and rebuilding real incomes combine to restore some affordability at the margin. The recovery is led by the North West and Scotland, both up more than 3% on the year, while London remains the laggard, still in low single-digit annual decline in several boroughs.

Lenders and portals running automated valuation models — algorithms that price a property in seconds from comparables, transaction flow and local listing data — say their internal estimates had been signalling the turning point in the North West and Scotland for several months before it showed up in the official mortgage-lender indices, which lag actual transaction pricing by design. Several lenders now use AVM output as an early input into regional risk pricing rather than waiting for quarterly index confirmation.

Affordability, measured as the ratio of average earnings to average prices, has improved for the fourth consecutive quarter nationally, driven roughly equally by modest real wage growth and the retreat in mortgage rates from their 2023 peak. First-time buyer numbers have moved in step, though they remain below the pre-2022 five-year average in most regions.