• House prices rose 1.6% in September according to Halifax
• Prices are now 7.3% higher than a year earlier - the biggest jump since June 2016
• The average house price now stands at £249,870
• In the last 3 months Halifax has received more mortgage applications from first time buyers and homemovers than at any time since 2008
• Halifax expects ‘significant downward pressure’ on house prices in the months ahead
Laith Khalaf, financial analyst at investment platform AJ Bell comments on the latest Halifax House Price Index:
“Exceptionally low interest rates, a stamp duty holiday, and all the pent up demand from lockdown continue to put wind in the sails of the property market. Meanwhile data from both Halifax and the Bank of England show that mortgages are selling like hotcakes.
“There is of course concern that the property market is having a Wile E Coyote moment; it’s run off the end of a cliff and just hasn’t looked down yet. Indeed it’s notable that the Halifax think there will be “significant downward pressure” on house prices in the coming months.
“As government economic support is withdrawn it’s likely that job losses will mount and that will serve to clip the wings of the housing market. Furthermore if another lockdown is imposed, the economic damage will be even greater than currently anticipated.
“However there are still strong underpinnings for the UK housing market. Interest rates remain low, which makes mortgages more affordable, particularly for those who haven’t suffered a financial dent from lockdown and indeed those whose coffers have swelled as they cut back on spending.
“The shift towards home working is also likely to drive activity in the market, as homeowners consider properties more suited to the new reality. There’s also a longstanding supply shortage, with an estimated 100,000 fewer homes being built each year than are needed which again keeps a floor under prices.
“Then there’s government policy. The Help to Buy scheme has helped hundreds and thousands of people buy a property, and the Prime Minister is now cooking up a new scheme for long term fixed rate mortgages with a 5% deposit. This would again facilitate demand and stoke activity in the market.
“So while the housing market is likely to face downward pressures, there are forces working in the opposite direction too. In the short term the end of the stamp duty holiday in March is also likely to drive activity. After all, nothing focuses minds quite like a deadline.”
