House prices report third month of gains

By Laura Miller -

halifax house prices

Property prices have risen for the third consecutive month, according to the Halifax House Price Index, which now puts the average cost of a home at almost £250,000.

The latest data means house prices are a startling 7.3% higher than the same time a year ago – the strongest growth recorded by Halifax since June 2016.

Russell Galley, managing director at Halifax, cautioned against over-reading the significant annual increase. “Context is important with the annual comparison, as September 2019 saw political uncertainty weigh on the market,” he said.

But monthly and quarterly figures are also high. House prices in today’s report for September were found to be 1.6% higher than in August, pushing average prices to £249,870.

For the quarter, from July to September, house prices were 3.3% higher than in the preceding three months, April to June.

“These numbers demonstrate the real extent and determination of the pent-up demand for homes and investment property across the country,” Joshua Elash, director of property lender MT Finance, said.

Demand for borrowing over the last three months has exceeded anything seen since the last financial crisis. From July to September, Halifax received more mortgage applications from both first time buyers and homemovers than anytime since 2008.

“Service levels have suffered across the board partly because of this level of demand,” Mark Harris, chief executive of mortgage broker SPF Private Clients, said, “with staff working from home, and delays with surveyors and solicitors also trying to cope with more work than usual”.

He added: “Brokers are busy with new business and remortgaging as borrowers take advantage of cheap mortgage rates,” deals that are disappearing fast. “Lenders are increasing pricing in the 80% LTV plus range, affecting first-time buyers, while those with bigger deposits continue to attract the most competitive deals,” Harris said.

Halifax’s Galley said homebuyer appetite is being led by 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.

He cautioned: “It is highly unlikely the housing market will continue to remain immune to the economic impact of the pandemic. We continue to believe 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.”

Paresh Raja, CEO at Market Financial Solutions, is bracing for what he expects will be a “challenging winter”, and raised the spectre of too few mortgage deals to allow buyers to complete on a sale.

“The number of mortgage products available is nowhere the number it was before the lockdown. The risk of a mortgage being denied is high – according to MFS research, one in three homebuyers have been denied a mortgage since the introduction of the stamp duty holiday,” he warned.