UK house prices reach new high but growth is slowing, says Halifax


The average price of a house in the UK reached a record high of £253,374 in December but growth is slowing and prices may fall over the year, according to Britain’s biggest mortgage lender.

Halifax said UK house prices ended 2020 on average 6% higher than in 2019 as pent-up demand after the first national lockdown and the government’s stamp duty holiday spurred a homebuying boom.

The average UK house was worth £14,295 more in December last year than the same month in 2019.

“Prices soared as a result of pent-up demand, a desire among buyers for greater space and the time-limited incentive of the stamp duty holiday,” said Russell Galley, the managing director of Halifax.

However, the lender said the 0.2% rise in prices in December compared with November was the lowest rate of growth in the past six months of continuous gains.

Halifax said there might be enough “residual strength” in the market to sustain prices in the short-term, with mortgage approvals at a 13-year high. However, the end of the government’s stamp duty holiday on houses up to £500,000 at the end of March and the tightening of the help-to-buy scheme to new homeowners only from April, are set to take the steam out of the market.

“With the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure remains likely as we move through 2021,” Galley said.

Last month, Halifax said it expected house prices in the UK to fall by up to 5% this year.

“What was first considered a mini-boom by the industry has gone further than many predicted,” said Miles Robinson, the head of mortgages at the online broker Trussle. “Mortgage approvals topped 100,000 in November, the highest on record since 2007. However, while the outlook is promising for the immediate future, we must remain cautious of a potential dip in spring as the stamp duty holiday and furlough schemes come to an end and the impact of a third national lockdown unravels.”

Howard Archer, the chief economic adviser to the EY Item Club, an economic forecasting group, said the latest report from Halifax suggested house prices “may just be starting to come off the boil”, and that the current resilience of the market was likely to become unsustainable sooner rather than later.

Source: Guardian

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