House prices reach record high according to Halifax House Price Index

House price data for the month of September 2020 released today by the Halifax show that prices have continued to rise. House prices are now 7.3% higher compared to September last year. The average price of a home in the UK is now £249,870. 12 months ago, the average house price was £232,806.

Russell Galley, Managing Director Halifax comments on the latest house price statistics and the expectation of downward pressure on house prices soon:
“The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains. The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016. Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.

“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May. Across the last three months, we have received more mortgage applications from both first time buyers and homemovers than anytime since 2008. There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and 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.

“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane. And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief. “Therefore while it may come later than initially anticipated, we continue to believe that 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.”

The number of properties sold in the UK appears to be recovering after the lockdown period. Data form HMRC shows the number of sales in August has risen 15.6% compared to the previous month.

Mortgage approvals are also now back to pre-lockdown levels. Data from the Bank of England shows a 28% increase in the number of mortgage approvals in July 2020 when compared to the previous month. Mortgage approvals in August 2020 were 29% above those in July 2019.
The number of new buyer enquiries have softened and new instructions remain positive with RICS stating both figures are up in August 2020 compared to the previous month.

However, mortgage availability remains a challenge for many wanting to buy a new home, especially those at higher loan-to-values. First-time buyers wanting mortgages with a 10% or 5% deposit will find that in order to be eligible for a mortgage most lenders will require them to have a guarantor to boost their deposit or they will need to live in a specific postcode area.