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House prices rise 6.5% in five months, wiping out stamp duty savings

Paloma Kubiak
Written By:
Paloma Kubiak

House prices show no sign of slowing down yet, having risen by almost 8% over the last year with the vast majority of that coming in the last five months.

The last five months from July to November have seen the average house price rise by 6.5% – the strongest five-month gain since 2004, according to the latest Halifax House Price Index.

The price of an average property rose by 1.2% in November to £253,243 taking it 7.6% higher than November last year.

This 12-month increase is the strongest since June 2016, according to the index.

The lender noted that the stamp duty saving of £2,500 on a home costing £250,000 is now far outweighed by the average increase in property prices since July.

And it added that properties sold to home-movers recorded a much higher rate of annual house price inflation of 7.9 per cent, compared to the 5.8 per cent rise in first-time buyer properties.

Values up £15,000 since June

Halifax managing director Russell Galley, said: “House prices rose by more than 1% in November, adding almost £3,000 to the cost of a typical UK home.

“At just over £253,000, the average property price has risen by more than £15,000 since June.

“With mortgage approvals at a 13-year high, the current market continues to be shaped by a desire for more space, the move from urban to rural locations and indications of a trend for more home working in the future.

“And while industry data shows agreed sales and new instructions to sell fell to their lowest level in the past five months, both remain at historically high levels and well above seasonal norms.”

However, while the housing market has been much more resilient than many predicted, Galley warned the economic environment continues to look challenging.

“With unemployment predicted to peak around the middle of next year, and the UK’s economy not expected to fully recover the ground lost over 2020 for a number of years, a slowdown in housing market activity is likely over the next 12 months,” he added.

Vaccine boost

Chestertons managing director, Guy Gittins, noted there had been a resurgence in interest as Covid-19 vaccines were announced.

“The second lockdown seemed to have very little negative impact on activity levels and even in the traditionally quieter month of November, we were tracking well above any point in the previous three years.

“Part of this was driven by the incentive of the stamp duty saving, but we believe the main driver is that people just want to move as quickly as possible while conditions are favourable.

“We also noticed an extra wave of new buyers entering the market when a vaccine was announced.”

He continued: “We seem to be in the very unusual position of supply actually meeting demand and the large number of buyers coming to the market are being met by an almost equally large increase in properties coming up for sale. This is tempering any major price movements and values are generally remaining relatively steady across London.”

Former Royal Institution of Chartered Surveyors residential chairman, Jeremy Leaf, noted activity had dipped slightly recently, as Christmas was proving an even greater distraction, but the picture was generally positive.

“There is no real sign that home buying and selling won’t resume in the early new year, albeit at a slightly slower pace as the prospects of taking advantage of the stamp duty holiday recede,” he said.

“There have been few withdrawals from previously-agreed sales and prices are holding up well, supported by the continuing shortage of the right properties at the right prices in the right locations.”