Since the Covid-19 boom, UK house sales have increased due to lower mortgage rates driving activity.

• The U.K. housing market is experiencing a surge in home sales due to the decline in mortgage rates, according to new data.
• In the four weeks to Sept. 22, there was a 25% increase in agreed home sales year-on-year, and new buyer inquiries also increased by 26%, according to property portal Zoopla.
• The possibility of tax changes in the Treasury's Oct 30 Autumn budget could lead to more properties being listed, according to analysts.

The U.K. housing market is experiencing an increase in activity, as lower mortgage rates have led to a rise in home sales, according to recent data.

The four weeks to Sept. 22 saw a 25% increase in agreed home sales year-on-year, marking the fastest pace of growth since spring 2021, as households that have delayed making moving decisions over the past two years re-enter the market, according to research published Thursday by property portal Zoopla.

The number of home buyer inquiries grew by 26% each year, according to the data.

The share prices of U.K. homebuilders increased by more than 2.1% after the data release.

In September, house prices increased at their fastest rate in nearly two years, with a 3.2% year-on-year increase from the previous month's 2.4%, despite lenders reducing borrowing costs following the Bank of England's first interest rate cut in over four years.

The average five-year fixed mortgage rate has decreased to 4.57% from 5.53% the previous year, as per the latest data from Rightmove. Some rates for these products have even fallen to 3.7%, which is below the Bank of England's (BoE) key rate of 5%.

Homeowners are gaining confidence due to lower mortgage rates, according to Richard Donnell, executive director at Zoopla, as stated in the report.

The Bank of England announced Monday that mortgage approvals increased in August to their highest level in two years.

The BOE's Nov. 7 meeting is being closely watched by market watchers for any movement on borrowing costs. Governor Andrew Bailey stated in an interview with the Guardian that the Bank may become "more aggressive" on rate cuts if inflation data remains positive.

Price growth diverges with Budget in view

On an annual quarterly basis, Northern Ireland experienced the most significant house price growth at 8.6%, followed by Scotland with 4.3%. Despite this, the north of England outperformed the south. However, London was the best performing southern region, with a 2% price growth.

Despite the "race for space" in the post-pandemic market, apartment sales are still lagging, according to Nationwide's Chief Economist Robert Gardner.

Landlords are selling their buy-to-let properties in anticipation of tax hikes in the upcoming Autumn budget.

As more second property owners enter the market, it is likely that price growth will be kept in check over the coming months, according to Donnell.

The ongoing speculation about potential tax changes in the Budget and the effects of previous tax changes continue to contribute to the increase in the number of homes for sale. Despite this, we remain in a buyers market, and the greater availability of homes for sale will help keep house price inflation under control until 2025.

The public finances have a £22 billion ($29 billion) "black hole," and Finance Minister Rachel Reeves has hinted that tax increases may be necessary to address it.

The government has decided to consider increasing capital gains tax and inheritance tax, which affect property sales, while leaving changes to income tax, National Insurance, and value-added tax unchanged.

The controversial non-dom tax status of the country is driving seller activity at the top end of the market, as wealthy U.K. residents consider relocating to lower tax jurisdictions.