‘Race for space’ factor in increase, say market experts

House prices in the United Kingdom had their sharpest monthly rise for more than 14 years in September, according to the Halifax House Price Index.

The index, shows the average house price rose 1.7% in September, which is the highest monthly increase since February 2007. House prices are 7.4% higher year-on-year, with the average price £267,5867.

The rise came in the run-up to the September 30 deadline for the removal of temporary stamp duty tax relief on house purchases. However Russell Galley, managing director of Halifax, said this was just one factor behind the rise.

He said: “While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired.

Galley said a “race for space” as people changed their preferences and lifestyle choices in the pandemic “undoubtedly” also had a major impact.

See also: House prices stalled in September, says Nationwide

 He said: “Looking at price changes over the past year, prices for flats are up just 6.1%, compared to 8.9% for semi-detached properties and 8.8% for detached. This translates into cash increases for detached properties of nearly £41,000 compared to just £6,640 for flats.”

Jonathan Hopper, chief executive of Garrington Property Finders, said:

” It’s tempting to see the surge in price growth as a last hurrah for the Stamp Duty holiday, which finally came to an end in England last week.

“But there is more to it than that. There is genuine heat in the market still, even if the frothiest excesses seen earlier this year are over. Gone are the days of sellers being able to hike prices week by week.

“Instead, the driving force is now old-fashioned market fundamentals, and the chronic imbalance of supply and demand.

“With so many buyers so keen to move – typically to somewhere with more space – and the number of homes for sale just not keeping up, prices continue to march upwards in many regions.”

The Halifax index would appear to contradict the picture provided by the Nationwide index for Septemeber, published last week, which showed a stalling of house prices.

In England, the threshold at which buyers are required to pay stamp duty was reduced at the end of June from £500,000 to £250,000 for three months. It will be cut again to its pre-pandemic level of £125,000 on 30 September as the covid-19 payment “holiday” comes to an end.