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Pandemic house price rises ‘unlikely to be reversed’

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Latest Halifax house price numbers put the mortgage lender’s monthly survey at odds with that produced by Nationwide.

Last week we reported that Nationwide had detected an August surge in prices, pushing them up by a further 2.1 per cent, making the countrywide average cost of a house £249,000.

This week Halifax has put the monthly increase at only 0.7 per cent and the average cost of a house at £263,000.

Nationwide puts the annual rate of increase at 11 per cent, Halifax at ‘only’ 7.1 per cent – the lowest rate since August last year and 2.5 per cent down on the May 2021 figure.

Both lenders agree, however, that prices are continuing on an upward path.

‘Given the rapid gains seen over the past 12 months, August’s rise was relatively modest and the annual rate of house price inflation continued to slow’, said Halifax managing director Russell Galley.

‘However, compared to June 2020, when the housing market began to reopen from the first lockdown, prices remain more than £23,600 ( 9.9 per cent) higher’.

Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared to a year ago, said Galley. ‘However, while such Government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation. We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working. These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.

‘Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term’.

Some areas appear to have headroom for even stronger price growth, said the Halifax, singling out the North East, Northern Ireland for special mention. But ‘Greater London continues to lag the rest of the country’.