Halifax: House prices surge to new record high in April

According to the lender, the average price of property stood at £258,204 in April following a 1.4% monthly change and sets a new record for the second month in a row.

Halifax say that in the latest quarter (February to April) house prices were 0.9% higher than in the preceding three months (November to January).

Russell Galley, Managing Director, Halifax, comments: “House prices in April eclipsed the record high set the month before as the market continued to maintain its recent momentum. The average property is now worth £258,204, up 1.4% month on month and 8.2% annually, the highest annual growth rate in 5 years. In cash terms, almost £20,000 has been added to the value of the average home since the market had essentially come to a standstill in April 2020.

“The stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the Government scheme. The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low-interest rates and continued demand is likely to continue to underpin prices in the market.

“However, we do expect recent levels of activity to be sustained over the short-term as buyers continue to search for homes with more space and potentially better suited for their new working patterns. Savings built up over the months in lockdown have given some buyers, even more, cash to invest in their dream properties, while the new mortgage guarantee scheme may have eased deposit constraints for some prospective homebuyers who previously thought their first step on the housing ladder was a few years away.

“There is growing optimism in the long-term outlook of the UK economy as the vaccination programme continues at pace, yet we remain cautious about the medium-term prospects of the housing market. As we said in March, the current levels of uncertainty and potential for higher unemployment as furlough support ends leads us to believe that house price growth will slow to the end of the year.”

Anna Clare Harper, chief executive of asset manager SPI Capital, adds: "According to Halifax, house prices grew by 8.2% in the year to April, reaching a record high that represents a price £20,000 higher for an average property. As we move towards the ‘tapering down’ of the temporary stamp duty measures, it’s worth thinking about what else is driving such a buoyant housing market, in an otherwise difficult economic environment.

"Firstly, in a context of long-term increases in living standards, many people wanted to move home, encouraged to improve their surroundings by repeated lockdowns. Secondly, it is cheap to borrow, due to very low-interest rates, which give buyers a ‘discount’. Thirdly, there is a ‘flight to safety’: in times of uncertainty, people want to put their money in stable assets as a way to diversify their risk from more volatile investments such as the stock market.

"Looking to the future, these other market drivers are likely to remain strong, throughout 2021. The good news for property investors and homeowners is that property tends to hold its value well through times of uncertainty. Demand stays strong, because we all need a roof over our heads, and new supply is limited.

"Stamp duty has been widely discussed over the past year as a cause of house-price growth and transactions. The next trend investors and homeowners need to consider is quite different. In the context of our commitment to net zero, environmental efficiency will be a key driver of house prices and values going forward."

Sundeep Patel, Director of Sales at specialist lender, Together, said: “Buyers racing to beat the Stamp Duty holiday amid record-low interest rates continued to drive up sales last month. House prices rose again on March by 1.4% and higher by 8.2% compared to April 2020, with the average house price in the UK now at £258,204.

“However, we are about to go through some significant changes over the next couple of months as we tiptoe back to normality. With the end of the £500K taper for Stamp Duty in June - and mortgage holidays winding up in July - we may see demand become slightly more subdued over the summer, as people think twice about the cost of moving as Government support starts to be withdrawn.

“There may also be a dip in activity during this period as people put on hold their moving plans in favour of foreign travel following the Government’s announcement of the ‘green list’ of international travel destinations.

“Only time will tell if house prices have been artificially inflated, or if we will continue to see growth throughout the rest of this year.

“Aside from prices, another consideration for the market long-term is housing availability. While the pent-up demand is a welcome sign for those looking to sell up the same can’t be said for those struggling to find affordable homes and make that first step onto the property ladder.

“It’s possible that this situation could lead to a rise in demand from specialist lenders as borrowers turn to finance such as bridging loans to quickly purchase their ideal homes. In addition, the number of buy-to-let investors leaving the sector is at its lowest in seven years* and continued house price growth may fuel a resurgence in buy-to-let as an attractive asset class.”