The September 2020 House Price Index published by Halifax

The Halifax September 2020 House Price Index shows House price growth continues to beat expectations as mortgage applications surge to 12-year high.

Headlines:

• On a monthly basis, house prices in September were 1.6% higher than in August
• In the latest quarter (July to September) house prices were 3.3% higher than in the preceding three months (April to June)
• House prices in September were 7.3% higher than in the same month a year earlier – the strongest growth since June 2016

Russell Galley, Managing Director, Halifax, said:

“The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains. The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016. Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.

“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May. Across the last three months, we have received more mortgage applications from both first-time buyers and home-movers than any time since 2008. There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.

“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane. And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.

“Therefore while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

Key facts – Housing activity:

• HMRC Monthly property transactions data shows a fourth consecutive monthly rise in UK home sales in August. UK seasonally adjusted residential transactions in August 2020 were 81,280 – up by 15.6% from July. The latest quarterly transactions (June-August 2020) were approximately 15.7% higher than the preceding three months (March-May 2020). Year on year, transactions were 16.3% lower than August 2019 (-23.9% on a non seasonally adjusted basis). (Source: HMRC, seasonally-adjusted figures)
• Mortgage approvals rise to the highest level since October 2007. Bank of England figures show that the number of mortgages approved to finance house purchases was 84,715 in August 2020 – this represents a rise of 28% from July. Year-on-year, the August figure was 29% above August 2019. Source: Bank of England, seasonally-adjusted figures)
• Results from the latest (August 2020) RICS Residential Market Survey continue to show the strength of the current sales market. The trend in new buyer enquiries has softened to a net balance of +63% from +75% last month. New instructions continue to be positive with a net balance of +46% (+58 previously). Alongside this, there was growth in agreed sales for the third consecutive month, with a net balance of +61% (+58% previously). (Source: Royal Institution of Chartered Surveyors’ (RICS) monthly report)

Kindly shared by Halifax

Main article photo courtesy of Pixabay