2020 has proven to be a challenging year on most fronts, however the housing market has shocked many. House prices have risen to an all-time high despite pre-lockdown fears. There are many factors to this sudden rise; from people re-evaluating their needs after lockdown, to the stamp duty holiday. But as house prices continue to rise, many are wondering, will it last?
Halifax has warned that the spike in house price inflation is ‘highly unlikely’ to continue. Once the toll of the pandemic on the economy becomes apparent later this year.
Fresh figures from the bank, which is Britain’s biggest mortgage lender, revealed that the average property price increased by 5.2 per cent annually to reach a record £245,747 in the year to August.
The average cost of a UK home reached £245,747, up 1.6 per cent on the month before and 5.2 per cent higher than a year earlier.
Halifax warned that affordability is now “challenging” for some buyers and said it was “highly unlikely” the current pace of price rises could be sustained for long with job losses on the horizon.
Russell Galley, managing director of Halifax, said: “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.”
“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,” Mr Galley said.
“Not withstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained. 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.”
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