UK houses prices hit record high after stamp duty holiday
Post-pandemic lifestyle choices cited as cause of surge in average home cost, reports Vicky Shaw
The average UK house price jumped by around £4,400 in September, pushing it to a new high of £267,587, according to an index.
Property values jumped by 1.7% month on month and by 7.4% on an annual basis, Halifax said.
The average price of a detached home has surged by £41,000 over the past year as buyers have searched for more space, the research found.
Russell Galley, managing director of Halifax, said growth in September was the strongest since February 2007, pushing year-on-year house price inflation up to 7.4%.
He added: “This also reversed the recent three-month downward trend in annual growth, which had peaked at an annual rate of 9.6% in May. The price of an average house is now as expensive as it has ever been, standing at just over £267,500.”
A stamp duty holiday in England and Northern Ireland ended in October, after being tapered from July, which may have played some part in the figures, Mr Galley said.
But he added: “It’s important to remember that most mortgagesagreedinSeptember would not have completed before the tax break expired.
“This shows that multiple factors have played a significant roleinhousepricedevelopments during the pandemic.
“The ‘race for space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact.
“Lookingatpricechangesover the past year, prices for flats are up just 6.1%, compared to 8.9% for semi-detached properties and 8.8% for detached.
“This translates into cash increases for detached properties of nearly £41,000 comparedtojust£6,640forflats.
“Against a backdrop of rising pressures on the cost of living and impending increases in taxes, demand might be expectedtosofteninthemonths ahead, with some industry measures already indicating lower levels of buyer activity.
“Nevertheless,lowborrowing costs and improving labour market prospects for those alreadyinemploymentarelikely to continue to provide support.”
Alimitedsupplyofproperties, with estate agents reporting a furtherreductioninthenumber of houses for sale, is likely to underpin average prices into next year, Mr Galley said.
Jason Tebb, chief executive of OnTheMarket.com, said: “With latest data from the Halifax suggesting that house prices are now rising as fast last month as they did in the housing boom of 2007, the momentum we’ve seen in the market since the beginning of the year appears to be continuing apace.
“This is of course great news for vendors; however, it will probably stretch affordability for many buyers.”
MartinBeck,senioreconomic advisertotheEYItemClub,said: “Headwinds to further house price growth are increasing. Households’ spending power faces both a rising cost of living and the increase in personal taxation due next April.
“The weaker outlook for incomes means housing affordability, on measures such as the ratio of prices to incomes, will look ever more stretched.”
Mike Scott, chief analyst at estate agency Yopa, said he expects the current strong rate of price growth “to be maintained into at least the first half of 2022”.