House price growth now at 15-year high: Halifax

Rising for the fifth consecutive month, average UK house prices continued to break records in November by soaring to £272,992, according to this morning's report from Halifax.

Related topics:  Finance News,  House prices
Warren Lewis
7th December 2021
House Prices 444

The figures revealed that quarterly house price inflation is now at its strongest level since late 2006 and sees Wales as the strongest performing region once again with average prices breaking to £200k barrier for the first time ever.

Northern Ireland also continues to record double-digit annual growth (10.0%, average house price of £169,348).

House prices also continue to rise in Scotland, with the average property now up 8.5% year-on-year, with the average price of £191,140 also the most expensive on record. In England, the North West remains by far the strongest performing region (+11.4%), which is its highest rate of growth since 2005 (average house price of £209,287).

London continues to lag the rest of the UK in its rate of house price growth, with annual inflation of just 1.1%, though this was up slightly from October. However, at an average of £521,129 properties in London continue to be much more expensive than in all other parts of the country.

Russell Galley, Managing Director, Halifax, said: “UK house prices rose again in November, with the value of the average property increasing by another 1%, or £2,808, tipping the annual rate of inflation up to 8.2%. This is the fifth straight month that average house prices have risen, with typical values up by almost £13,000 since Jun e, and more than £20,000 since this time last year.

“On a rolling quarterly basis, the uptick in house prices was 3.4%, the strongest gain since the end of 2006, bringing the new average property price up to a record high of £272,992. Since the onset of the pandemic in March 2020, and the UK first
entering lockdown, house prices have risen by £33,816, which equates to £1,691 per month.

“The performance of the market continues to be underpinned by a shortage of available properties, a strong labour market and keen competition amongst mortgage providers keeping rates close to historic lows. Those taking their first step onto the property ladder are also playing an important role in driving activity, with annual house price inflation for first-time buyers at 9.1% compared to 8.8% for home movers.

“We see this across different property types too, with double-digit annual price inflation for flats (+10.8%) over the last year compared to slower gains for detached properties (6.6%). This could suggest the ‘race for space’ is becoming less
prominent than it was earlier in the pandemic, with industry data also showing the overall number of completed transactions has fallen back since the end of the Stamp Duty holiday.

“Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation. Economic confidence may be also be dented by the emergence of the
new Omicron virus variant, though it remains far too early to speculate on any long-term impact, given insufficient data at this stage, not to mention the resilience the housing market has already shown in challenging circumstances.

“Leaving aside the direct impact of a possible resurgence in the pandemic, for now, we would not expect the current level of house price growth to be sustained next year given that house price to income ratios are already historically high, and
household budgets are only likely to come under greater pressure in the coming months."

Anna Clare Harper, chief executive of property consultancy SPI Capital, says: "Halifax says house prices rose to a 15-year high this month at £272,992, despite the recent end of the temporary stamp duty holiday. This strong growth may seem surprising since transactions also fell to a nine-year low in October 2021.

"The latest data shows that house-price growth is not just about how many people want to buy and sell, but how much they want to do so, and how able they are to do it.

"The temporary stamp duty reduction designed to combat the impacts of Covid on the housing market acted as a catalyst, but this was not the cause of recent house-price growth. Many people still want and need to buy a home. We also have a severe shortage of quality housing, and stiff competition among lenders, meaning finance is cheap and widely available. As a result, with so many people wanting to, and able to afford to move home, demand is greater than supply and house prices continue to rise.

"Going forward, it is likely that the pace of growth will slow, in particular through the colder winter months which make it harder for many potential buyers logistically, with fewer daylight hours for viewings.

"However, growth is likely to continue while interest rates remain low, since the cost of holding on to a property is cheap, and competition amongst lenders means low cost, fixed-rate mortgages are widely available.

"The biggest problem the housing market faces is the shortage of available stock, which means that prices are likely to remain strong. This issue is unlikely to change anytime soon due to higher costs of materials and labour, a backlog of planning applications and a growing burden of rules and regulations for property developers to contend with."

Sundeep Patel, director of sales at Together, said: “With another increase of 1% in November, house prices continue to rise with the average house price now sitting at a record £272,992.

"Government interventions like stamp duty holiday, largely the reason for inflated prices, have ended earlier in the quarter, yet we continue to see a surge in demand. Talks of The Bank of England loosening affordability checks may further inflate a housing bubble, pushing house prices to unsustainable levels.

"Economic volatility coupled with a supply chain crisis could lead to further turmoil as builders faced with material shortages, struggle to keep up with the demand for new properties, resulting in a shortage of supply.

"With the focus on the holidays, sellers and buyers may put on the brakes and reassess their property plans later in 2022 but widespread uncertainty lingers as we head into the New Year. Specialist lenders can expect to be highly sought after as borrowers seek financial support in the months ahead.”

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