"Following four months of decline, average house prices in July experienced their greatest month-on-month increase this year"
House prices are 1.6% higher than in June and 3.8% higher than a year ago.
However, prices dipped on a quarterly basis by 0.2% and Halifax says uncertainty remains with "likely greater downward pressure on prices in the medium term".
Russell Galley, managing director of Halifax, said: “Following four months of decline, average house prices in July experienced their greatest month-on-month increase this year, up 1.6% from June and comfortably offsetting losses in 2020. The average house price in July is the highest it has ever been since the Halifax House Price Index began, 3.8% higher than a year ago.
“The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown. As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices. Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.
“However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent.
“In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium-term.”
Anna Clare Harper, author of Strategic Property Investing, commented: "The temporary nature of the stamp duty holiday has unsurprisingly encouraged many people to buy property. Throw six months’ worth of pent-up supply and demand and lockdown-led lifestyle changes into the mix, and, anecdotally, you have a frenzy in the housing market. The Halifax data is more measured, showing house prices rebounded by 1.6 per cent between June and July.
"These numbers reflect and affect current confidence in the economy, as well as recent and temporary policies. What we can’t forecast is what happens next: economically, and in policy. What we can predict accurately is that these two factors will prove fundamental to the future of the UK housing market."
