Average house price exceeds £250,000 but downturn looms - Halifax
Average UK house prices have exceeded £250,000 for the first time amid a mini-boom induced by the Chancellor's stamp duty holiday but a downturn lies ahead, Halifax said.
The average property price rose 0.3% in October to £250,457, Halifax reported in its monthly survey. House prices were 7.5% higher in October than a year earlier - the fastest annual rise since June 2016, Britain's biggest mortgage lender said.
Prices have jumped 5.3% in the past four months - the sharpest rise over that period since 2006 - spurred by Chancellor Rishi Sunak's cancellation of stamp duty on the first £500,000 of a purchase. The stamp duty holiday is due to end on 31 March, causing a rush of transactions.
The market has also been spurred by demand suppressed when the property market closed during the first Covid-19 lockdown and households seeking more green space and bigger properties to work from home.
October's 0.3% increase showed a marked slowdown from September's 1.5% growth suggesting buyers becoming more cautious as Covid-19 cases mounted and economic uncertainty increased. The government implemented a second lockdown in England from Thursday and the Bank of England has stepped in to support the economy.
Russell Galley, managing director of Halifax, said: “As we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain. Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with Covid-19 is far from over. With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021.”
Some experts have warned the property market could move from boom to bust in 2021 as the stamp duty holiday ends and unemployment rises. Sunak bowed to pressure on Thursday and extended his job furlough programme until the end of March in an indication the government expects tough economic times ahead.
David Westgate, chief executive at Andrews Property Group, said: “On the surface this is one of the greatest bull runs in the UK property market, but sadly a giant bear is looming on the horizon. You can feel its presence in the negligible monthly growth rate.
"After a surge led by post-lockdown demand, the stamp duty holiday and a desire to relocate for extra lockdown space, the market is now in cool-down mode. Much depends on whether the headwinds turn into a hurricane."