In October, House Prices in Halifax Hit All-Time High Average
Real estate experts have cautioned that government policies, such as increased stamp duty for second home buyers, could impact demand.
October saw average house prices reach a historic high, but market data indicate that borrowing costs remain a challenge for many buyers.
House prices inched up by 0.2 percent last month to £293,999, surpassing the previous peak of £293,507 set in June 2022.
This marks the fourth consecutive month of rising house prices, despite ongoing economic challenges like inflation and high borrowing costs affecting buyer affordability.
Halifax’s head of mortgages, Amanda Bryden, noted the recent increase in house prices reflects a period of stability following the rapid growth seen during the COVID-19 pandemic.
Despite the challenging economic climate, Bryden highlighted that the fact that house prices have reached these heights again is surprising, especially considering they did not fall significantly even with higher interest rates.
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Compared to the significant growth during the “race for space” phase from January 2020 to mid-2022, the recent 0.2 percent price increase over the last two-and-a-half years reflects a more stable and resilient market.
The number of new mortgages approved recently hit a two-year high, Bryden reported.
She added, “This aligns with decreasing average mortgage rates since spring—now more than 160 basis points lower than in summer 2023—along with continued positive income growth.”
Economists anticipate the bank to reduce rates slower than previously expected, which could prolong higher mortgage costs.
Bryden also noted that new government policies like increased stamp duty for second home buyers and reverting to previous thresholds for first-time buyers could impact demand.
“While we anticipate continued house price growth, it is likely to be gradual for the remainder of this year and into the next,” she said.
Initiatives announced by Chancellor Rachel Reeves in the Budget include enhancing housing supply and upgrading the planning system. The rise in stamp duty on second home purchases is predicted to affect the private rental market, widening the demand-supply gap.
Regional Differences and Outlook
House price growth shows significant regional variations across the UK.
In October, Northern Ireland led with a 10.2 percent annual increase, bringing the average property price to £204,242. Wales also saw robust growth, with a 5.6 percent year-on-year increase to an average of £225,543.
In contrast, Scotland experienced more moderate growth in its housing market, with a 1.9 percent increase raising the average property cost to £206,480.
In England, the northwest recorded the strongest annual growth at 5.9 percent, reaching an average price of £235,587.
London remains the priciest region, with the average property now priced at £543,308, reflecting a 3.5 percent year-on-year increase.
“With more options and continued buyer affordability challenges, sellers must acknowledge the price sensitivity and price competitively to secure a sale,” the group noted, mentioning that offers typically fall below the asking price.
Guy Gittins, chief executive of estate agent Foxtons, commented on the fourth consecutive month of positive growth, stating, “The housing market’s current strength is evident.”
“Looking ahead post the autumn Budget, the forecast remains optimistic,” Gittins added.
PA Media contributed to this report.
