Average house price now just under £250,000 after 7.3% jump this year

House prices are soaring (Picture: Ella Byworth for Metro.co.uk)

If you’re looking to get on the property ladder, you might need to up your budget.

The average prices is now £249,870 and according to the Halifax House Price Index, prices have jumped 7.3% since last year.

The bank said the surge in September was the strongest growth since June 2016.

Property values climbed by 1.6% month on month because despite the economic uncertainty caused by coronavirus, the market is flooded with buyers.

Halifax also said that the number of mortgage applications it has been receiving from both first-time buyers and home-movers is the highest in 12 years.

Many house sales that were delayed during lockdown are now progressing and lots of buyers are taking advantage of the cut to stamp duty, which ends in March 2021.

Russell Galley, managing director, Halifax, said: ‘The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains.

‘The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016.

‘Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.

‘Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May.

‘Across the last three months, we have received more mortgage applications from both first-time buyers and home-movers than anytime since 2008.

‘There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home-working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.’

But he warned that this surge is unlikely to last as we start to feel more of the economic impact from the pandemic.

Russell continued: ‘The release of pent-up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane.

‘And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.

‘Therefore, while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.’

Mark Manning, managing director of Leeds-based estate agent Manning Stainton, added: ‘We’re currently seeing a real surge in demand from second- and third-steppers looking to move up the ladder while they can still take advantage of the stamp duty break, so the market looks set for another really strong month.’

Some in the industry said they have already seen the signs of uncertainty, particularly as furlough comes to an end and we get closer to the end of the stamp duty break.

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: ‘Demand has lost a little momentum over the past few weeks as the resurgence in Covid-19 and new restrictions on businesses is making some buyers a little more nervous, especially as there is more property available for sale.

‘Looking forward, we expect demand to remain fairly solid but transaction times to lengthen a little as some of the economic realities start to bite.’

But Laith Khalaf, a financial analyst at AJ Bell, said that while we should be cautious about the current mini-boom, he said there are things that could mean prices continue to rise.

He said: ‘There is of course concern that the property market is having a Wile E Coyote moment – it’s run off the end of a cliff and just hasn’t looked down yet.

‘Indeed, it’s notable that the Halifax think there will be ‘significant downward pressure’ on house prices in the coming months.

‘As Government economic support is withdrawn it’s likely that job losses will mount and that will serve to clip the wings of the housing market. Furthermore, if another lockdown is imposed, the economic damage will be even greater than currently anticipated.

‘However there are still strong underpinnings for the UK housing market.’

Laith pointed to low interest rates, the shift towards home-working which is making people reassess where they live, and Government policy, which he said should help to drive activity, particularly Boris Johnson’s announcement yesterday to introduce more 5% mortgages.

The Help to Buy scheme has helped hundreds and thousands of people buy a property, and the Prime Minister is now cooking up a new scheme for long-term fixed-rate mortgages with a 5% deposit. This would again facilitate demand and stoke activity in the market.’

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