House prices hit the highest levels on record in July, driven by “exceptional” levels of demand.
Prices rose this summer (in the first house price increase since the UK went into lockdown) according to the latest Halifax House price index.
As reported by This is Money, this uptick in demand brings the price of the average UK home to £241,604, some 3.8 per cent higher than last year despite the decline in the first half of 2020. But experts warn the recovery may be short lived as the furlough scheme nears its end and fears over the health of the economy loom.
Some 63,250 homes were bought and sold in June, a rise of 31.7 per cent from May following the Government’s lifting of lockdown measures and the introduction of the stamp duty cut.
This echoes the Royal Institution of Chartered Surveyors’ recent findings that buyer demand, sales and new listings have all rallied after declining dramatically during lockdown.
Halifax’s Russell Galley said:
“The average house price in July is the highest it has ever been since the Halifax house price index began.”
Mortgage Solutions have been looking at the house price forecast from Really Moving in a bid to predict where house prices are likely to sit by autumn.
The firm’s house price forecast uses agreed prices compiled from homebuyers who typically register for moving services 12 weeks before completions. It also accesses retrospective Land Registry price figures.
As a result, it predicted average agreed house prices to experience an annual increase of 11.4 per cent to £333,331 in October.
This would represent 6.1 per cent growth from September’s predicted average of £314,235.
Compared to June’s actual average agreed price of £308,280, prices are expected to fall by 3.8 per cent in August to £296,485. Compared to August last year, this will be a drop of 1.4 per cent.
Overall, Reallymoving is expecting agreed prices to grow 8.1 per cent between June and October.
However, the firm warned the increase in activity could be short lived if the economy and jobs market struggled to support itself without government and lender support.
The cut in stamp duty and pent-up demand following the UK lockdown has driven a sharp surge in house buying which has surprised some analysts. Looking ahead to autumn and winter, the current economic uncertainty is making it much more difficult than usual for experts to predict the direction of travel for house prices. It seems likely that in the short term, demand will ease somewhat. However, Halifax’s summer figures and Really Moving’s projected figures do provide some grounds for optimism that should we see the UK economy and jobs market stabilise over the coming months, there could be the potential to move from a mini housing boom to a more sustained return to growth for the UK housing market.