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House prices soar, but virus immunity ‘highly unlikely’

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 House prices were 1.6 per cent higher in September than in August, Halifax has reported.

The figure was even higher than the 0.9 per cent reported by Nationwide this month and brings the estimated annual rate of increase to 7.3 per cent – the fastest rate of increase since June 2016

‘The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains’, said Halifax managing director Russell Galley. ‘The annual rate of change will naturally draw attention, with the increase of 7.3 per cent 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 home movers than at any time 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’.