The average price of a UK home continues to rise, now reaching an annual increase of 9.5 per cent, according to the latest House Price Index from Halifax.
The figures, released yesterday, show that the average price of a home now stands at £261,743 and is currently increasing in value each month by 1.3 per cent.
Halifax also reported that the number of residential transactions within April were over 35 per cent lower than in March, despite mortgage approvals rising.
Russell Galley, managing director of Halifax, said that the average UK home has increased in value by over £22,000 in the last year.
He added: “Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates. For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.”
Galley went on to say that the current strength in house prices pointed to ‘a deeper and long-lasting change’ as buyer preferences shifted following the coronavirus pandemic.
He added: “These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.”
Industry reaction was mixed. Sundeep Patel, director of sales at Together, said: “How the property market will shape up by the end of this year is no way near certain. However, whether house prices have been artificially inflated or not, it is possible the backlog in demand from keen buyers will markedly increase opportunities for specialist lenders, as increased volumes of borrowers turn to finance such as bridging loans to quickly purchase their ideal homes.”
Patel added: “However, with the Stamp Duty tax break starting to taper off from the end of this month, we’re likely to see this unprecedented rush for new homes ease off by the time we hit the end of summer. The recently released travel traffic light list for UK holidaymakers may also dampen activity as people prepare to make a break for guaranteed sun and so stick a pin in their property plans back home.”
Other took a more-combative tack. Guy Harrington, CEO of Glenhawk, said: “Without wanting to sound like a broken record, this growth just isn’t sustainable. I’ll eat my invisible hat if we don’t see significant pricing retrenchment by Q4, when the true impact of the pandemic on the UK economy reveals itself.”
This post has originally been featured in Property Wire.