Halifax sees potential for further house price rises

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Yet more confirmation of soaring house prices has come from the latest Halifax House Price Index.

It found that the price of an average house had gone up by 1.3 per cent between April and May, and 9.5 per cent in the year to May.

‘House prices reached another record high in May, with the average property adding more than £3,000 to its value in the last month alone’, said Halifax managing director Russell Galley,

‘A year on from the first easing of national lockdown restrictions, and the gradual reopening of the housing market, annual growth surged to 9.5 per cent, meaning the average UK home has increased in value by more than £22,000 over the past 12 months.

‘Heading into the traditionally busy summer period, market activity continues to be boosted by the Government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates. For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.

‘Whilst these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing. These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.

All UK regions bar the North East saw an acceleration in year-on-year house price inflation last month. The strongest growth was again recorded in Wales (up 11.9 per cent over the past year), closely followed by the North West and Yorkshire & Humber, both of which posted double-digit annual growth. For Wales and the North West, these are the biggest percentage gains since April 2005, and for Yorkshire & Humber since June 2006.