British house prices rose at the fastest annual rate in October since June 2016, as the average home now sells for more than £250,000 ($326,261) for the first time, according to Halifax.
House prices increased 7.5 per cent in October compared to a year earlier, higher than the 7.3-per-cent rise recorded in September, according to the building society’s House Price Index. However, there are signs the market is slowing, with only a 0.3-per-cent rise in prices in October from the previous month, when house prices rose 1.5 per cent.
“The average UK house price now tops a quarter of a million pounds (£250,547) for the first time in history, as annual house price inflation rose to 7.5 per cent in October, its highest rate since mid-2016,” said Russel Galley, managing director at Halifax.
“Underlying the pace of recent price growth in the market is the 5.3-per-cent gain over the past four months, the strongest since 2006. However, month-on-month price growth slowed considerably, down to just 0.3 per cent compared to 1.5 per cent in September.”
A desire for more space following the pandemic spurred many to upsize or relocate after the lockdown. There was a fifth consecutive monthly rise in UK home sales in September, according to HM Revenue and Customs data, with 98,010 residential transactions, up 21.3 per cent from August.
Mortgage approvals also rose 7 per cent in September to 91,454, the highest level seen in 13 years, according to Bank of England data. While this was down from a rise of 27 per cent in August, the September figure was 39 per cent above the same month a year ago.
Mr Galley said the market was still predominantly driven by home-mover demand for larger houses, as well as pent-up demand after the lockdown.
“Since March, flat prices are up by 2 per cent compared to a 6-per-cent increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses,” he said.
However, with the macroeconomic landscape looking “highly uncertain,” Mr Galley expects greater downward pressure on house prices in 2021.