Newly released data from Halifax has revealed that during October, average house prices across the UK topped £250k for the first time ever following the strongest growth in over four years.
Halifax data shows that on a monthly basis, house prices in October saw a 0.3% rise against September and between August and October, saw a 4.0% rise against the preceding three months. Driven by the mini-boom, research shows that house prices in October were 7.5% higher than in the same month a year earlier – the strongest growth since June 2016.
Russell Galley, Managing Director, Halifax, comments “The average UK house price now tops a quarter of a million pounds (£250,547) 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. However, month-on-month price growth slowed considerably, down to just 0.3% compared to 1.5% in September.
“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.”
Anna Clare Harper, CEO of asset manager SPI Capital and author of Strategic Property Investing, says “According to Halifax, house prices were 7.5% higher than in the same month a year earlier. On the face of it, this feels like positive news amidst much that is negative – economically, politically, and socially – at least for property owners. It’s not as simple as this, and this pace of growth is not forecast to continue at the same level.
“Right now, prices are being buoyed up by the temporary Stamp Duty reduction, the release of pent-up demand and supply, and the desire to improve surroundings following lockdown. For example, growth in detached properties was 6%, due to many families understandably seeking more space. Another important factor is that in times of uncertainty, there is a ‘flight to safety’: many people prefer to invest in tangible assets like property.
“The truth is, the housing market is not one market. If you’re thinking about buying a property in this fast-changing environment, one of the best things you can do is to detach from the emotional dimension, so that you are able to analyse whether you are getting a good price and ‘value for money’.”
[Source: propertyreporter.co.uk , 6 November 2020]
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