Property prices hit record high as analysts warn rise will continue
House prices have hit a record high as analysts suggest higher demand has come up against a continued shortage in the housing supply.
The cost of the average UK home reached £293,999 in October, the highest ever recorded, outstripping the £293,507 reached in June 2022, according to Halifax. The 0.2 per cent rise is the fourth consecutive month of growth in the market.
In London, the average property now costs £543,308, up 3.5 per cent on last year.
Halifax suggested that house prices have been buoyed by a combination of a fall in mortgage rates, which has bolstered demand, and a “race for space” as supply constraints make themselves felt.
RBC housing analyst Anthony Codling agreed that the price rise was as much to do with supply constraints as demand drivers.
“[The increase] points to a shortage of available homes and the fact that housing affordability is a constraint for all homebuyers.”
Codling added that he expected “stable house prices for the rest of 2024 and further house price rises as mortgage rates start to fall in the spring of 2025.”
Jonathan Hopper, CEO of Garrington Property Finders, said: “It says a lot about the scale of the property market’s pent-up demand that price momentum barely slowed in October, even as some buyers held back in the run-up to last week’s Budget.
“While the Budget contained some nasty surprises for anyone considering buying a second home or a rental property, the handbrake is finally off and the market is once again working up through the gears.”
Budget a ‘minor irritation’
Despite fears that the policies announced in Rachel Reeve’s autumn budget would create a more difficult inflationary environment and therefore slow growth in housing market, analysts have suggested that the market will quickly settle.
“Following last week’s budget, interest rate cuts may fall more slowly than we had previously thought, but in the big scheme of things this is a minor irritation rather than the end of the world,” Codling said.
Guy Gittins, CEO of Foxtons, said: “While homebuyers were understandably disappointed about the lack of a stamp duty relief extension last week, the vast majority have already factored this increased cost into their plans for 2025 and those currently looking to purchase still have time to complete before the deadline at the end of March next year.
“As a result, we can expect the heightened level of market activity seen this year to continue, with momentum strengthening as we head into 2025, further elevated by forecast interest rate reductions, the first of which could be seen as soon as today.”