The bank’s house price index for October recorded a 7.5% year-on-year rise in prices compared to the same month in 2019 and there was also an increase of 5.3% over the quarter.
Halifax said the property market had experienced its strongest annual growth since June 2016 and the quarterly increase was the most significant since 2006.
However, while the average house price is at £250,457, the monthly growth was not quite so strong. Indeed, month-on-month it slowed considerably, down to just 0.3% compared to 1.5% in September.
Russell Galley, managing director, Halifax, said: “This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the chancellor’s waiver on stamp duty for properties up to £500,000.
“While government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain.
“Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with COVID-19 is far from over. With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021.”
‘Ridiculous’
Although the property boom was clearly still in full swing in October, industry experts were receiving the news cautiously.
Indeed, Lucy Pendleton, property expert at independent estate agents James Pendleton, said: “Average house prices may have crashed through a quarter of a million pounds for the first time but the growth rate that got them there is frankly ridiculous.
“There seems little prospect that house prices are really rising this fast nationally, and it’s a dangerous thing to be saying, unless true, because it can scare off first-time buyers, who are the lifeblood of the market.
“The huge demand that has driven the market higher has been fuelled by armies of buyers pumped up by impatience, adrenalin, frustration and relatively cheap borrowing.”
And David Westgate group chief executive at Andrews Property Group, was not convinced this level of growth would last. He said: “On the surface this is one of the greatest bull runs in the UK property market, but sadly a giant bear is looming on the horizon.
“You can feel its presence in the negligible monthly growth rate of just 0.3% compared to September.”
Detached houses
The data also offered an insight into the types of property buyers are seeking. Halifax revealed flat prices had increased by 2% since March compared to the 6% increase being experienced by a typical detached property.
Halifax said, in cash terms, this equated to an £2,883 for flats compared to £27,371 for detached houses.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The impact of Covid is clear with the flat-to-house price differential never as pronounced as this before.
“People require more outdoor space and not all flats have roof terraces and balconies. But while Covid is having a massive impact it is likely to be temporary in the scheme of things, with people not able to work from home four days a week forever.
“Employers are likely to be more accepting of home working but once we have more normality, they will want to see people in the office more. Those flats that are 20 minutes from the workplace will be more appealing than a house on the Dorset coast if you have to be in the office four times a week.”
