Just as we all adapt to the second lockdown amidst prophecies of doom and gloom, up pops the Halifax Building Society with some highly surprising news – house prices are at a record high.
Russell Galley, Managing Director of Halifax says: “The average UK house price now tops a quarter of a million pounds - £250,457 - for the first time in history, as annual house price inflation rose to 7.5% in October, its highest rate since mid-2016. Underlying the pace of recent price growth in the market is the 5.3% gain over the past four months, the strongest since 2006.”
“Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses. Since March, flat prices are up by 2.0% compared to a 6.0% increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses.”
“This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.”
“While Government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain. Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with COVID-19 is far from over. With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021.”
March is shaping up to be a key month with furlough, payment holidays, Help to Buy and the stamp duty all coming to an end at the same time. The big question is: will property prices wait until then to drop or will the predicted downwards arc start before then?
Slowing demand is already being reflected in house prices; the Halifax data shows month-on-month price growth slowed considerably in October, down to just 0.3% compared to 1.5% in September.”
Lucian Cook from Savills estate agents says: “It will be difficult to sustain the current momentum through to the close of the year, especially at the lower end of the market where buyers have less existing housing wealth behind them and are likely to be more exposed to the risk of unemployment.”
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