The bank’s house price index for August revealed a rise over the quarter of 1.3% too, providing yet more evidence of sustained housing market recovery through the summer.
According to Halifax, the average house price in the UK is now at £245,747.
Its report comes just days after Nationwide’s house price index showed price growth at 3.7% annually.
Russell Galley, managing director at Halifax, said annual growth was at 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,” Galley said.
Growth is ‘unsustainable’
However he said it was ‘highly unlikely’ this level of price inflation would continue.
He explained: “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.”
Industry reaction
Lucy Pendleton, property expert at independent estate agents James Pendleton, said: “Another week, another record high.
“Storming house price growth like this will feel more like a lottery win for some homeowners, particularly those approaching retirement or looking to downsize in the near future. Only four months ago they would have had good reason to have lost heart.
“This confirms the red hot finish to the summer suggested by the Nationwide last week and the typically more bullish Halifax index hasn’t disappointed.”
While many paid tribute to the stamp duty holiday as being one of the main drivers – along with pent up demand – to the bumper August, there were also concerns about first-time buyers.
Alan Cleary, group managing director at OneSavings Bank for mortgages, said: “It’s good to see the housing market leading the economy out of the deep freeze and with house prices having reached record highs in August, it clearly shows that the Stamp Duty holiday is working as intended.”
He added: “The withdrawal of 90% LTV mortgage deals from the market may see confidence waver at the bottom end of the market, particularly for first-time buyers and those with smaller deposits however there are still deals to be made.”
