First-time buyer price inflation nears 10 per cent as London house prices shoot past £500k
First-time buyer annual house price inflation is now at a five-month high, at 9.2 per cent, and has pushed ahead of the equivalent measure for home movers, at 8.1 per cent, according to property experts. In London, the average house prices have shot passed £500k.
The average UK house price hit a record high of £270,027 in October. The average property value grew by 0.9% in October – showing an increase of more than £2,500 during the month, Halifax said yesterday.
Annual house price inflation accelerated to 8.1%, from 7.4% in September.
Halifax said it is the first time the average UK house price has topped £270,000.
Halifax put average house prices at around £20,000 higher than a separate index run by Nationwide Building Society, with studies using different methods to track average prices.
Earlier this week, Nationwide said the average UK house price had hit a new record for its index of £250,311.
Wales remains the strongest performer across the UK, with annual house price inflation of 12.9%, according to Halifax’s index.
Russell Galley, managing director of Halifax said: “With prices rising for a fourth straight month, the annual rate of inflation now sits at 8.1%, its highest level since June.
“One of the key drivers of activity in the housing market over the past 18 months has been the race for space, with buyers seeking larger properties, often further from urban centres.
“Combined with temporary measures such as the cut to stamp duty, this has helped push the average property price up to an all-time high of £270,027.
“Since April 2020, the first full month of lockdown, the value of the average property has soared by £31,516 (13.2%).”
He said that first-time buyers, supported by parental deposits, have improved mortgage access and low borrowing costs have also helped to drive price growth in recent months.
Mr Galley said: “First-time buyer annual house price inflation (9.2%) is now at a five-month high, and has pushed ahead of the equivalent measure for home movers (8.1%).
“More generally the performance of the economy continues to provide a benign backdrop to housing market activity. The labour market has outperformed expectations through to the end of furlough, with the number of vacancies high and rising relative to the numbers of unemployed.
“With the Bank of England expected to react to building inflation risks by raising rates as soon as next month, and further such rises predicted over the next 12 months, we do expect house buying demand to cool in the months ahead as borrowing costs increase.
“That said, borrowing costs will still be low by historical standards, and raising a deposit is likely to remain the primary obstacle for many. The impact on property prices may also be tempered by the continued limited supply of properties available on the market.”
Nathan Emerson, chief executive of estate and letting agents’ body Propertymark, said: “The balance of housing supply and demand continues to be out of kilter, but as people hunker down for Christmas a seasonal lull within the market is expected.
“However, we know that the desire to move is still there with many UK residents – it’s just the question of when they will choose to make the move.
“Because of continuing motivations, agents are predicting to see a burst of energy in quarter one of 2022, with buyers and sellers looking to the new year to secure their new homes.”
Mike Scott, chief analyst at estate agency Yopa, said: “The housing market will soon begin its usual slowdown for Christmas, but Yopa expects it to bounce back strongly in January.”
Karen Noye, a mortgage expert at wealth management business Quilter, said that with inflation starting to bite and expectations that the Bank of England base rate will potentially increase soon, “any interest rate rise is almost certainly going to take the wind out of the sails of the market as potential buyers struggle to find low-cost (mortgage) deals”.
Tom Bill, head of UK residential research at Knight Frank, said: “Over 3.5 million first-time buyer mortgages have been issued since the base rate dropped to 0.5% in March 2009. That is a large group of homeowners who don’t know what it’s like when interest payments rise meaningfully.”
Jan Crosby, UK head of infrastructure, building and construction at KPMG, said: “While the complexities of supply chain delays are ongoing, developers are still being hammered by demand for new projects – especially outside of cities.
“This is good news for sellers, with continued supply constraints on new-build homes and insatiable demand.”
Here are average house prices in October and the annual increase, according to Halifax:
East Midlands, £221,999, 8.4%
Eastern England, £314,695, 7.5%
London, £514,907, 0.8%
North East, £156,502, 7.3%
North West, £205,881, 10.4%
Northern Ireland, £169,308, 11.3%
Scotland, £190,023, 8.6%
South East, £365,934, 7.3%
South West, £280,460, 9.8%
Wales, £198,880, 12.9%
West Midlands, £228,141, 7.0%
Yorkshire and the Humber, £188,095, 8.1%