Continued government support for the housing market has pushed average house prices in the UK to a new record high of £254,606, according to the latest data released by Halifax.
Halifax revealed this morning that on a monthly basis, house prices in March were 1.1% higher than in February and over the latest quarter (January to March), 0.3% higher than in the preceding three months (October to December).
When looking at year-on-year figures, house prices were 6.5% higher than in March 2020.
Russell Galley, Managing Director, Halifax, said: “Following a relatively subdued start to the year, the housing market enjoyed something of a resurgence during March, with prices up by just over 1% compared to February. This rise – the first since November last year – means the average property is now worth £254,606, a new record high.
“A year on from the early days of the first national lockdown, March’s data shows that house prices rose by 6.5% annually, or £15,430 in cash terms. Casting our minds back 12 months, few could have predicted quite how well the housing market would ride out the impact of the pandemic so far, let alone post growth of more than £1,000 per month on average.
“The continuation of government support measures has been key in boosting confidence in the housing market. The extended stamp duty holiday has put another spring in the step of home movers, whilst for those saving hard to buy their first home, the new mortgage guarantee scheme provides an alternative route onto the property ladder.
“Overall we expect elevated levels of activity to be maintained in the coming months, with consumer confidence spurred on by the successful vaccine rollout, and buyer demand still fuelled by a desire for larger properties and more outdoor space, as work-life priorities have shifted during the pandemic. A shortage of homes for sale will also support prices in the short term, as lower availability always favours sellers.
“However, with the economy yet to feel the full effect of its biggest recession in more than 300 years, we remain cautious about the longer-term outlook. Given current levels of uncertainty and the potential for higher unemployment, we still expect house price growth to slow somewhat by the end of this year.”
Anna Clare Harper, chief executive of asset manager SPI Capital, says: "This annual house price growth of 6.5 per cent, despite the current, uncertain environment, reflects two broad trends.
"Firstly, affordability. The temporary stamp duty reduction is having a more than proportionate impact since it gives buyers a larger deposit to work with, and they take lending on the property price, not the transaction costs. In addition, ongoing low-interest rates make the cost of borrowing very low, and high savings rates over the past year have given many buyers an opportunity to increase their deposits so that they can afford to pay more for housing.
"Secondly, rising living standards. This is a long-term, global trend, and we have seen it come to the fore in the UK housing market in the form of existing homeowners trading up to improve their living environment, spurred on by multiple lockdowns.
"Looking to the future, the extension to the temporary stamp duty reduction is likely to continue to encourage housing transactions and price growth, though this will slow as the temporary measures ‘taper down’.
"The trend of rising living standards is expected to continue in the long term, though the unfortunate truth is that it is unequal within and between generations. For lower-income households and younger generations, affordability constraints and preferences for flexibility will continue to boost rental demand, throughout wider uncertainties and the inevitable unemployment that comes with the difficult economic circumstances we find ourselves in."
Tomer Aboody, director of property lender MT Finance, says: "Another month and a year on from the first lockdown, the property market is at its strongest with further and continuous stimulus from the government, via stamp duty relief and furlough, along with other financing and assistance.
"What we are seeing is a real lack of stock which in turn increases competition and house prices. Is it time for the government to review the stamp duty at the higher level or possibly remove downsizers’ stamp duty altogether in order to improve supply and help buyers find properties?
"While money is cheap and confidence is high with the vaccine rollout, maybe a further stamp duty change higher up will help the market further."
Mike Scott, Chief Analyst at estate agency, Yopa, says: "The Halifax House Price Index for March differs from the Nationwide report for the same month by showing increasing market momentum and house prices in the month. As reported by Halifax, the average house price in March was up by 1.1% on February, and up by 6.5% on last March. The Nationwide reported a 0.2% fall for the month, with the annual rate of change falling to 5.7%. However, the Halifax data seems to us to be a more accurate reflection of the levels of activity that we are seeing in the market at present.
"Halifax expects market activity and price levels to remain strong in the coming months, driven by a shortage of homes for sale, government measures to support the market, changed housing needs as a result of the pandemic and the gradual relaxation of the pandemic restrictions. This is also Yopa’s assessment, though we would add the tens of billions of pounds of “accidental savings” made by many people who have kept their jobs and incomes over the past year but had fewer opportunities to spend money and a likely public mood and sentiment for a fresh start in life after the pandemic as additional factors supporting the market.
"Halifax does sound a note of caution and expects price growth to slow by the end of the year, but we believe that the factors listed above will be enough to sustain prices all the way through 2021, and do not expect any slowdown to start before the beginning of next year."