Property’s five month price dash fastest rise since 2004

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house prices

House prices have risen so much in the last five months market watchers would have to go back 14 years to find a comparable period of growth.

In November prices were 1.2% higher than in October, according to the Halifax Price Index, adding almost £3,000 to the cost of a typical UK home.

In the three months from September, the increase was 3.8%, versus the preceding quarter.

The average home now costs £253,243. This is more than eight times the average annual UK salary of £30,800.

“Today’s index shows buyer demand for property has not waned and the stamp duty holiday is continuing to stimulate property investment, increasing demand for real estate and pushing prices higher,” said Paresh Raja at Market Financial Solutions.

He welcomed the news, “given the importance of the property market in supporting the UK’s post-pandemic recovery”. He echoed earlier calls from lenders for the government to extend the stamp duty beyond 31 March 2021.

Failure to do so “will risk a sudden and significant drop in transactions and an inevitable plummet in house prices”, said Joshua Elash, director of property lender MT Finance.

Buyers are now paying 7.6% more on average for a home than the same time a year ago – the strongest annual growth since June 2016.

Russell Galley, managing director at Halifax, said the growth has been driven by a level of buyer demand in the last five months not seen for more than a decade.

“At just over £253,000, the average property price has risen by more than £15,000 since June. In percentage terms that equates to 6.5% – the strongest five-monthly gain since 2004,” he said.

Anna Clare Harper, chief executive of asset manager SPI Capital, said while this seems positive news, against a backdrop of nerves around our economic future, “investors should avoid using such statistics to guide individual investment decisions”.

“Subtleties the data masks include how homebuyers are overtaking first-time buyers as the driving force behind housing market growth, and how the rate of growth in detached properties has been markedly higher than in flats, as home buyers who can afford to do so are increasingly and unsurprisingly choosing more indoor and outdoor space,” she said.

There are also an increasing number of ‘anomalies’ in the market, according to Harper. For example, new regulations to prevent a repeat of the tragic Grenfell incident mean hundreds of thousands of homeowners have found the value of their properties dramatically reduced, “often with terrible personal consequences”, she said.

“As our housing market becomes more regulated and standards are increased, it becomes increasingly important to consider all angles, rather than relying on national market trends,” added Harper.

Mortgage approvals are at a 13-year high, as the current market continues to be shaped by a desire for more space, the move from urban to rural locations and indications of a trend for more home working in the future.

Industry data shows agreed sales and new instructions to sell fell to their lowest in the past five months in November, but remain at historically high levels and well above seasonal norms, according to Halifax.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said buyers should avoid panicking ahead of the March 2021 stamp duty holiday cut off.

“If they wish to take advantage of the stamp duty saving, they need to select their lender carefully, use a broker and a switched on solicitor. There is still plenty of time to save a substantial sum of money but the right advisers need to be in place,” he said.