Halifax reports March surge in prices

House prices surged by more than 1% in March, according to the latest monthly survey by the Halifax.

The mortgage lender said that prices were up by 1.1% on February as the market took confidence from the government’s extension to the current Stamp Duty holiday in the Budget, alongside a promise of government-backed 95% loan-to-value mortgages.

The sharp rise, which takes annual house price inflation to 6.5%, contrasts with the 0.2% drop recorded last week by Nationwide. The lender said this probably reflected the sentiment prior to the Budget measures.

The figures also follow a more mixed start to the year, with prices widely seen as falling back in January. Yesterday the RICS reported a strong acceleration in housing market activity March, with sharply increased demand and agreed sales.

Russell Galley, managing director at the Halifax, said the housing market enjoyed a “resurgence” in the month after the subdued start to the year, taking average prices to a record high.

He said: “The continuation of government support measures has been key in boosting confidence in the housing market.

“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.”

However, he said the bank remained cautious about the longer term outlook for the housing market, given the economy is still to feel the full effect of the deepest recession in 300 years. He said: “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.”

Jonathan Hopper, chief executive of Garrington Property Finders, said the success of the vaccine programme was giving confidence to sellers, and estate agents were now “talking of a boom rather than a bounceback.”

However, Dean Clifford, co-founder of Great Marlborough Estates, said the government needed to ensure it balanced measures to maintain house price growth with actions to ensure homeownership wasn’t out of reach for first-time buyers. He said: “Initiatives such as government-backed mortgages will help some first-time buyers get onto the property ladder but must form part of a wider policy mix that focuses on boosting overall supply.”