House price surge continues in September

House prices rose by a further 1.6% in September, according to the latest figures from Halifax.

The rise takes the average price of a house to just under £250k, and marks the third consecutive month of house-price growth. The increase, a fraction below the 1.7% increase seen in August, pushes the year-on-year change in September to 7.3%, the highest annual rise since before the UK voted for Brexit.

The strong growth comes after data released last week appeared to show the first signs of a slowdown in the post-lockdown market surge, with Zoopla reporting a fall in demand from first-time buyers.

Russell Galley, managing director of Halifax, said the market had been “extremely strong” since lockdown restrictions began to ease in May. The mortgage lender received more applications from both first-time buyers and homemovers than at any time since 2008.

He said: “There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.”

However, Galley added that the housing market was “highly unlikely” to remain immune to the economic effects of the pandemic. he said: “The release of pent-up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane.

“Therefore, while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

In response to the data, James Forrester, managing director of estate agent Barrows and Forester, said demand had been “monumental” but agreed that it was not clear “how much fuel is left in the tank” of the housing market.

He said: “It’s very likely that we will see this strong level of growth sustained as we see out the remainder of the year. However, with the furloughs scheme coming to an end, this could be the final swansong before a period of muted market activity.”