UK house price growth during September increased at its fastest pace since early in 2017, resulting in average values hitting a new high, according to latest Halifax index.

Residential properties reach growth gains momentum

Year-on-year, prices were four per cent higher last month – the biggest annual increase since the 5.1 per cent rise recorded in February – bringing the average house price across the country to £225,109, the highest ever recorded by the bank.Russell Galley, managing director of Halifax Community Bank, said, “The annual rate of growth has picked up for the second consecutive month, rising from 2.6 per cent in August to four per cent in September.“The average house price is now £225,109 – the highest on record. House prices in the three months to September were 1.4 per cent higher than in the previous quarter, the fastest quarterly increase since February.“While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year. UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment.“However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand.”

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Related stories:

• London sees first home price drop since 2009
• London property falls as regional price growth continue
• UK house market picks up - with sharp regional differences

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Mr Galley added that he did not anticipate that the expected increase in interest rates also would have “a significant effect on transaction volumes”.Lucy Pendleton, from London estate agents James Pendleton, commented, “The back-to-school bounce in September is likely the cause of this substantial rebound in growth. It is an annual trend, which sees a backlog of transactions brokered in the summer months complete in September once everyone comes back from holiday.“What that often means is that the prices attached to those transactions reflect where the market was much earlier in the year, when prices were higher.“On the face of it, this rate of annual growth shoots the market right over the head of inflation with a healthy 1.1 per cent gap and means home-owners are no longer living in an investment that is losing money in real terms.“You would think this data would instil much more confidence among sellers but actually this seasonal distortion is quite misleading and you could see price growth soften just as quickly in the coming months.”

Market remains stable

Jonathan Hopper, managing director of Garrington Property Finders, added, “In the current cautious market, prices treading water is good – and stability plus gentle growth is very good. But momentum remains patchy and what growth there is is wavering rather than sustained, and prices remain under intense pressure in several key regions.“In London, prices have been sliding in many of the areas that saw the frothiest rates of growth during the boom. On the flipside, the flight of equity from the capital is fuelling activity in several regional markets where affordability and perceived value for money is now enticing higher volumes of buyers.“Reading the runes for the future course of the market offers few bright spots. RICS (Royal Institution of Chartered Surveyors) data confirms that average stock levels have inched up but remain close to an all-time low.”Jonathan Samuels, CEO of the property lender Octane Capital, described the rise in average prices as “bitter-sweet” and being driven more by a shortage of properties than consumer confidence.  ”Structural supply problems, a shortage of properties for sale and a robust jobs market are keeping the property market afloat,” he said. “Even if rates are hiked this year or in early 2018, the consensus is that they are unlikely to rise more than quarter of a per cent. “The stakes are simply too high and the economic backdrop too uncertain for anything more than a nominal rise in interest rates. Since any rate rises will be limited, the impact on transaction volumes may indeed be negligible in the near term.“It’s when rates start creeping towards and above one per cent that we are likely to see confidence hit. That’s when things start to change and when prices could come under increased pressure.“In 2018, the narrative of a sideways-moving market with relatively low transaction levels and buyers in the driving seat is likely to continue.”Alex Gosling, chief executive of online estate agents HouseSimple.com, also cautioned against “getting carried away” by the Halifax figures.“Let’s not forgot prices are still being supported by low supply, low mortgage rates and low unemployment, rather than a sudden rise in buyer demand,” he said. “Saying that, we are definitely starting to see more optimisim from buyers and sellers, and confidence in the stability of the housing market.“Our research shows that new sellers in September were up a fifth on August. This could be attributed to low numbers of new properties being marketed over the summer. However, we have seen more new sellers last month than any single month in the past two years, which suggests it’s not simply down to the lull in activity over the holiday period.“Buyers and sellers are still concerned about Brexit, but they are possibly more confident that whatever deal is struck, the fallout won’t be as bad as first predicted.”For related news and features, visit our Residential Property section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory  

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