It is looking like good news for homeowners and anyone looking to sell a residential property in the near future. Once again, UK property prices have spiked above and beyond all expectations, with August having brought about the biggest monthly boost since 2016.
According to the latest figures released by Halifax, the average price for a UK home in August has reached a new high of £245,747. This indicates a monthly increase of 1.6% compared to the average house price in July, along with a huge 5.2% increase over the same month in 2019.
The figure came in slightly under the maximum year-on-year increase of 6% some analysts had predicted, though it remains remarkable. Particularly when considering the fact that the UK’s economy is still finding its feet after an extensive period of lockdown, a spike to record-high house prices is a welcome indicator of a strong recovery.
Mortgage lending activity is up 66%
This remarkable growth in average property prices has been attributed to both the Chancellor’s temporary stamp duty holiday on purchases under £500,000 and pent-up demand being unleashed on the sector post-lockdown.
In addition to the market’s impressive record performance reported by Halifax, rival lender Nationwide also indicated an impressive spike of 2% in average house prices between July and August, along with a 3.7% increase year-on-year.
Predictions of pent-up demand being released when the housing market reopened appear to have been accurate, with the Bank of England reporting an enormous 66.2% spike in mortgage lending activity between June and July. In July alone, figures suggest that more than 66,300 mortgage applications were approved by lenders in England alone.
Is there a housing bubble on the horizon?
Despite the ongoing complications brought about by the COVID-19 crisis, the UK’s housing market is nonetheless tipped for a strong recovery. Given predictions that Britain’s GDP could contract by as much as 10% this year, the housing market is expected to continue performing with strength for the immediate future, at least.
However, experts do not necessarily see the current record-breaking house price acceleration continuing, which will most likely slow over the coming months.
“Rising house prices contrast with the adverse impact of the pandemic on household earnings, and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium term,” commented Russell Galley, managing director of Halifax.
Meanwhile, property consultancy Knight Frank stated that while the current level of acceleration is unsustainable, property prices will continue to increase for the rest of the year. Those with larger outdoor spaces or in proximity to green spaces in particular are expected to see ongoing gains.