Finance News

Halifax: House prices reach new record high - but a slowdown is anticipated

Warren Lewis
6th November 2020
House Prices 444

The latest data and analysis from Halifax has revealed this morning that, during October, average house prices across the UK topped £250k for the first time in history following the strongest growth since June 2016.

The lender revealed that on a monthly basis, house prices in October were 0.3% higher than in September and in the latest quarter (August to October), house prices were 4.0% higher than in the preceding three months.

House prices in October were 7.5% higher than in the same month a year earlier – the strongest growth in over four years.

Russell Galley, Managing Director, Halifax, comments on the figures:

"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."

Jamie Johnson, CEO of FJP Investment, adds:

"The property market is moving from strength to strength. Amidst the uncertainty, buyer demand for bricks and mortar is pushing prices to record highs. Nationwide revealed this last week and Halifax has confirmed these latest movements today with month-on-month and year-on-year increases.

"Yet with the country now in a second lockdown, is this momentum about to suddenly run out? I don’t believe so. After all, the Stamp Duty holiday is still in play and the government has confirmed buyers and renters can still move houses throughout November. Clearly, it understands the importance of the property market in supporting the economy.

"I anticipate the rate of house price growth to slow down in November, however, it will no doubt continue to remain in positive territory. People are clearly looking to invest in safe and secure assets during this uncertain climate, and real estate has a proven track record of being resilient and quickly recovering from a period of market volatility."

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