House prices rise at fastest pace since February 2007 - Halifax

House prices rose in September at the fastest monthly pace since February 2007 amid a "race for space" as the stamp duty holiday drew to a close, according to a survey released on Thursday by Halifax.

House prices increased 1.7% on the month to a record £267,587, following a 0.8% jump in August. On the year, prices were up 7.4% in September following a 7.2% increase in August.

The worst-performing regions in terms of annual house price inflation were all in the South and East of England, although Halifax did note that these are also the areas with the highest average house prices.

Eastern England saw annual growth of 7.2%, while in the South East it was 7%. Greater London remained the outlier, with annual growth of just 1% and an average house price of £510,515, and was again the only region to record a drop in house prices over the latest rolling three-monthly period.

Halifax managing director Russell Galley, said: "While the end of the stamp duty holiday in England - and a desire amongst homebuyers to close deals at speed - may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. This shows that multiple factors have played a significant role in house price developments during the pandemic.

"The ‘race-for-space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact. Looking at price changes over the past year, prices for flats are up just 6.1%, compared to 8.9% for semi-detached properties and 8.8% for detached. This translates into cash increases for detached properties of nearly £41,000 compared to just £6,640 for flats.

"Against a backdrop of rising pressures on the cost of living and impending increases in taxes, demand might be expected to soften in the months ahead, with some industry measures already indicating lower levels of buyer activity. Nevertheless, low borrowing costs and improving labour market prospects for those already in employment are likely to continue to provide support."

Andrew Wishart, property economist at Capital Economics, said: "The large rise in the Halifax house price index in September suggests that we are right to think that robust demand and limited inventory will mean that prices record further gains after the stamp duty holiday ends."