The latest index from Halifax has shown annual house prices in the UK are rising. The prices surged to 5.2 per cent in August up from 3.8 per cent in July. Which is taking the UK-wide average to a record high of £245,74.
UK house prices in August were 1.6 per cent higher than in July. While the prices in the latest quarter were 1.3% higher than in the preceding quarter of March to May.
Halifax managing director Russell Galley says:
“House prices continued to beat expectations in August.”
“Annual growth is at its strongest level since late 2016, with the average price of a property tipping over £245,000 for the first time on record.
“A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty.”
Galley does not believe that this level of house price inflation will be sustained and commented:
“The macroeconomic picture in the UK should become clearer over the next few months as various government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.”
“Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium-term.”
Trussle head of mortgages, Miles Robinson agrees that the growth figures are likely to be temporary.
“While rising house prices might be a sign of market recovery, it’s important to consider how the wider economic environment could be affecting borrowers.
“We’re fast approaching the end of the furlough scheme and with it a period where the employment market could be incredibly challenging for many.
“As such, the demand we’re currently seeing might begin to fade.”
“In addition, large numbers of buyers are already locked out of the market. First-time buyers, in particular, are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value products.”
“The number of 90 per cent LTV mortgage products available has dramatically decreased, with 92 per cent of deals pulled from the market since March this year.”
“Alongside this, rising house prices mean first-time buyers will be getting less for their money, presenting a further hurdle to getting onto the property ladder.”
“While lenders are right to be cautious in today’s climate. We’d urge the industry to ensure the market remains accessible to all.”
MT Finances director Tomer Aboody adds:
“Many buyers have been leaving London for surrounding areas where their money is also going that bit further. Especially when you factor in the stamp duty incentive.
“If this uptick in market activity is going to continue once the furlough scheme comes to an end in October, the government will need to intervene again and help the market with further stimulus.”
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