UK house prices rose by 6.5 percent in the months of June to November, Halifax said on Monday, with price increases now cancelling out average stamp duty savings.
House prices increased on average by £15,000 ($), the strongest five-month run on house prices since 2004, with the average property price rising to just over £253,000 ($), according to the latest Halifax figures (pdf).
In the quarter from September to November, house prices were 3.8 percent higher than they were in the preceding quarter of June to August, Halifax said, and 7.6 percent higher in November compared with the same month last year—the strongest growth in the housing market since 2016.
“With mortgage approvals at a 13-year high, the current market continues to be shaped by a desire for more space, the move from urban to rural locations and indications of a trend for more home working in the future,” Russell Galley, the managing director of Halifax, said in a statement.
“And while industry data shows agreed sales and new instructions to sell fell to their lowest in the past five months, both remain at historically high levels and well above seasonal norms.”
Several factors appear to be driving the current surge in prices. National and local lockdowns are one factor, as people seek to have more personal space under restricted freedom of movement measures. The other is the stamp duty holiday announced by chancellor Rishi Sunak in July, which saw the tax frozen on all houses sold for less than £500,000 until March 2021.
“Our market research suggested that nearly 30 percent of those considering a move were doing so to access a garden or outdoor space more easily, with 25 percent looking to get away from the hustle and bustle of urban life,” Nationwide Chief Economist Robert Gardner said in the building society’s November report (pdf).
Mortgage approvals also rose in October, with the latest Bank of England figures showing the number of mortgages approved rose 6 percent to 97,532, a 51 percent increase on the same period last year.
However, the current boom is not expected to continue with the full fallout from the response to the CCP (Chinese Communist Party) virus not expected to be felt until next year.
“The housing market has been much more resilient than many predicted at the outset of the pandemic, and indeed many households remain confident about further price growth next year. However, the economic environment continues to look challenging,” Galley said.
“With unemployment predicted to peak around the middle of next year, and the UK’s economy not expected to fully recover the ground lost over 2020 for a number of years, a slowdown in housing market activity is likely over the next 12 months.”