House prices rose for the third month in a row, and were 7.3% higher in September than in 2019, according to the latest Halifax House Price Index.
On a monthly basis, house prices in September were 1.6% higher than in August. In the latest quarter (July to September) house prices were 3.3% higher than in the preceding three months (April to June). House prices in September were 7.3% higher than in the same month a year earlier – the strongest growth since June 2016.
Russell Galley, Managing Director, Halifax, said: “The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains. The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016. Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.
“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May. Across the last three months, we have received more mortgage applications from both first time buyers and homemovers than anytime since 2008. There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.
“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. 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. And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.
“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.”
Nonetheless, in the short-term is seems nothing can deter buyers from their first or next home. Ross Counsell, chartered surveyor and director at Good Move, said: “Despite rising prices, mortgage applications in the UK are at a huge 12-year high, suggesting that buyers and sellers are taking full advantage of policies such as the stamp duty holiday.
“Lockdown has had an undeniable positive impact on the housing market, with more people looking to move to homes with more home-working and outdoor space, but although these latest statistics are positive, the medium to long term outlook of the UK housing market still remains uncertain. With the stamp duty holiday ending in March, rising unemployment figures and the end of the furlough scheme this month, the future of the property market will depend entirely on how the wider economy performs.
“This will affect many people looking to buy or sell their home, but first-time buyers are expected to be affected the most. It’s probable that lenders will tighten their criteria for granting a mortgage and be more cautious to who they lend to, so first-time buyers may struggle getting on the ladder once the reality of an economic recession kicks in. Hopefully, more policies will be put in place to help protect first-time buyers in the future.”
