Yahoo Finance UK house prices top £250,000 for first time in history but come with a warning sign
Buyers paid more than £250,000 ($328,160) for the average UK home last month, breaching the quarter-of-a-million mark for the first time in history.
Halifax’s house price index, one of the longest-running and most closely followed gauges of the UK property market, shows prices were 7.5% higher in October than a year earlier.
It marks the highest rate of annual growth since mid-2016. Russell Galley, managing director of Halifax said the market continued to be “supercharged” by stamp duty cuts and soaring interest in moving amid the pandemic, fuelling unusually high levels of demand that has pushed up prices.
But new data from the lender published on Friday also provides the latest in a string of early signs that the significant momentum driving Britain’s property boom is starting to fray.
While growth is remarkably strong year-on-year, the pace of monthly price gains has slowed sharply over the past two months. Prices were up 0.3% between September and October, compared to 1.5% gains a month earlier and 1.7% the previous two months.
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“Yet another record high for average UK house prices, although Halifax sounds the warning that month-on-month growth has slowed considerably,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.
“The housing market bounce back was hard and strong when we were able to go out after Lockdown 1 eased but it has petered out a little and we are seeing more normalised figures.”
There are also growing questions about how representative of the whole UK market current transaction figures are.
“Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses,” said Galley.
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Some experts say better-off buyers purchasing more expensive properties make up a growing proportion of sales, with access to mortgages tightening for first-time buyers and those with lower deposits.
Lucy Pendleton, of estate agents James Pendleton, claimed there was “little prospect that property prices are really rising this fast nationally.”
Galley added: “While government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, 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.”
