UK house prices jump as average home tops £250,000 for first time
UK house prices rose at the fastest annual rate in more than four years in October but the mortgage lender Halifax said the market would slow over the coming months because of new coronavirus lockdown rules and a weaker economic backdrop.
Halifax, which is part of Lloyds Banking Group, said in October the average price of a home topped £250,000 for the first time, with prices up 7.5% compared with a year earlier. It was the strongest rate of annual growth since June 2016.
UK country house prices hit four-year high in ‘race for space’
The housing market has benefited from a temporary stamp duty holiday on properties up to £500,000, and a so-called race for space, with many people reconsidering their lifestyles and looking for larger houses, or rural homes, during the Covid-19 pandemic.
However, a 0.3% rise in average UK house prices between September and October, to £250,457, was the weakest rate of monthly growth since the chancellor, Rishi Sunak, announced the stamp duty holiday in July. Halifax said the market was likely to slow further during the second wave of Covid-19.
Russell Galley, Halifax’s managing director, said: “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.”
Howard Archer, the chief economic adviser to the EY Item Club, said the slowdown in monthly growth was a sign that prices “starting to come off the boil”.
Rising Covid-19 cases, new lockdown rules and an expected rise in unemployment despite the extension of the furlough scheme are expected to weigh on prices, he said.
“The current robust housing market activity and firming of prices will prove unsustainable sooner rather than later,” Archer said.
Meanwhile, the housebuilder Redrow said it was benefiting from the shift towards more homeworking during the pandemic, which has prompted more people to move in search of more space.
In a statement prepared for the company’s annual general meeting on Friday, Redrow’s chairman, John Tutte, said: “We entered the new financial year in a position of strength and this has been reinforced with strong trading since the start of the year. There has been resolute demand for homes with more space to live and work as customers reflect on their lockdown experiences.”
Redrow, which has been scaling down its operations in London, said it was “well-positioned to capitalise on the evident shift in buyer priorities” after increased focus on regions including the north-west, Midlands and home counties.
Redrow’s sale offices are staying open during England’s month-long lockdown but are closed in Wales because of its restrictions. “In any event, customers are able to progress transactions through our online portal and we anticipate the handover of homes will be unaffected,” the company said.
The housebuilder said it expects to restart dividend payments at the half-year.
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