House price rises are a family business: Halifax House Price Index

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the publication of the Halifax House Price Index, which shows house price rises are a family business.

Key points from publication:
  • Average house prices reached a record high in October of £270,027.
  • They increased at their fastest pace since June – up 8.1% in a year.
  • House prices for first time buyers rose faster than for home movers – up 9.2% compared to 8.1%.
Sarah Coles said:

“House price rises have become a family business. The Bank of Mum and Dad is powering growth in the price of first properties that’s outstripping the rest of the market. That growth then feeds back into a boost for their own property prices, forming a virtuous circle for any families with the resources to tap into.

“As house prices rise, parents feel more confident about dipping into the equity in their home in order to give their children cash to help them onto the property ladder. This helps drive demand for first properties, which not only pushes up the price of these properties, but also gives second steppers more cash to make a move, and so the rise in prices spreads across the market. It finally feeds into the price of family homes, so that more parents now feel more confident about dipping into the equity in their home, and so the circle continues.

“Unfortunately, parents who aren’t in a position to help, can’t offer the same kind of boost to their offspring, so those trapped outside the family circles are stuck watching prices rise further and further out of reach.

“It’s not just your parents who can help though. If you’re saving for a first property, it makes sense to put the first £4,000 you save every year into a Lifetime ISA, so you get another £1,000 of free money from the government. It’s not as generous as having parents who can afford to hand over tens of thousands of pounds, but it’s definitely far better than going it alone entirely.”

 

Kindly shared by Hargreaves Lansdown

Main photo courtesy of Pixabay