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%.”

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.”