The August 2020 House Price Index published by Halifax

The August 2020 House Price Index published by Halifax shows house prices rebound further to reach record high, challenging affordability.

Headlines:

• On a monthly basis, house prices in August were 1.6% higher than in July
• In the latest quarter (June to August) house prices were 1.3% higher than in the preceding three months (March to May)
• House prices in August were 5.2% higher than in the same month a year earlier
• Uncertainty remains with likely greater downward pressure on prices in the medium term

Russell Galley, Managing Director, Halifax, said:

“House prices continued to beat expectations in August, with prices again rising sharply, up by 1.6% on a monthly basis. Annual growth now stands at 5.2%, its strongest level since late 2016, with the average price of a property tipping over £245,000 for the first time on record.

“A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty.

“Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained. The macroeconomic picture in the UK should become clearer over the next few months as various Government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.

“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.”

Key facts – Housing activity:

• HMRC Monthly property transactions data shows a rise in UK home sales in July. UK seasonally adjusted residential transactions in July 2020 were 70,710 – up by 14.5% from June, as the market continues to recover from the lockdown period. The latest quarterly transactions (May-July 2020) were approximately 23.2% lower than the preceding three months (February-April 2020). (Source: HMRC, seasonally-adjusted figures)
• Mortgage approvals returned to pre lockdown levels. Bank of England figures show that the number of mortgages approved to finance house purchases was 66,281 in July 2020 – this represents a rise of 66% from June. Year-on-year, the July figure was 1% below July 2019. Source: Bank of England, seasonally-adjusted figures)
• Results from the latest (July 2020) RICS Residential Market Survey point to an ongoing recovery across the market. New buyer enquiries have improved to a net balance of +75%, up from +59% last month (and – 4% in May). New instructions also rose firmly to a net balance of +59% (compared with +41% in June and -20% in May). Alongside this, a net balance of +57% saw a rise in newly agreed sales (up from +43% in June and -30% in May). (Source: Royal Institution of Chartered Surveyors’ (RICS) monthly report)

Kindly shared by Halifax

Main article photo courtesy of Pixabay