Industry warns of short-term boom as house prices rise 7.3%
The average house price in the UK has risen 7.3% year-on-year to £249,870, according to the Halifax house price index for September.
On a monthly basis, this was a 1.6% increase on August’s average property price.
This annual growth is the strongest the market has seen since June 2016, but property professionals said the boost could be artificially inflated by government incentives and warned it may not last.
Guy Harrington, CEO of residential lender Glenhawk, said: “The question now is how much longer can the housing market defy the Covid-19 gloom?
“Growing consensus suggests we are in for a nasty shock, unless the doom-mongers have got it very wrong and the economy can ride out an unemployment-led economic slump. As history has shown us, when it comes to the UK housing market, all bets are off.”
Nicky Stevenson, managing director at estate agent group Fine and Country, said the property market was “basking in its own economic microclimate” as people sought larger, more expensive homes.
He added: “There will be a flip side though. When this extra demand for larger homes starts to return to normal, the annual rate of growth overall could sit down as quickly as it stood up.”
Compared to a weaker base
With pent up demand and the stamp duty holiday adding to high business volumes, the market is notably more active than it was this time last year, where prices suffered consecutive declines as doubts toward the general election and Brexit negotiations grew.
Russell Galley, managing director of Halifax, said: “Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.”
Homemovers and first-time buyers driving activity
Appetite appears to be most prominent among homemovers and first-time buyers as Galley said Halifax received more mortgage applications from these groups than any time since 2008.
However, he also suggested this demand would only boost prices for so long before they start to decline.
He added: “The release of pent-up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane.
“Therefore while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”