The average UK home cost just under £250,000 (US$322,921) in September, a stunning 7.3% higher than a year ago, says a report released Wednesday.
It marked the third month of “substantial gains” in British home values, driven by a wave of house buying since the real estate market started to open up in mid-May from a pandemic-induced lockdown, according to the monthly Halifax House Price Index, the country’s longest-running home-price series. Real estate agents and analysts, including those at Halifax, however, are questioning how much longer the price surge can continue.
“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease,” said Russell Galley, managing director of Halifax.
In the last three months, the British lenders have received more mortgage applications from home buyers than any period since 2008, Mr. Galley said.
Both the practical realities of working and schooling from home mixed with the added incentive of a stamp duty holiday, which eliminated transfer tax on the first £500,000 paid for a residential property until next April, have spurred home buyers to move en masse, he said. Nevertheless, he called it “highly unlikely” the market could continue at its current pace given the full economic fallout from the crisis has yet to be felt.
“As employment support measures are gradually scaled back beyond the end of October, the specter of increased unemployment over the winter will come into sharper relief,” Mr. Galley said.
Affluent buyers have been a driving force in the post-lockdown home rush, leading to more expensive sales and pushing average prices up, said Hugh Wade-Jones, managing director of Enness Global Mortgages, in reaction to the latest Halifax report.
“This is certainly a trend that’s being led by the top end of the market and by those with the financial stability to transact on these larger homes at the drop of a hat,” Mr. Wade-Jones said. If, more likely when, those bigger-ticket sales slow, the surge in average price growth will likely subside and become “more normal,” he added.