House prices leapt to a new high in July, in a “surprising spike” after the market was put on pause earlier this year, according to an index.
Property values jumped by 1.6 per cent, or £3,770, month-on-month on average in July, Halifax said. Across the UK, the average property value was £241,604 in July, up from £237,834 in June. House prices increased by 3.8 per cent annually.
The housing market has gradually been reopened after restrictions were imposed earlier this year as part of the coronavirus lockdown.
Russell Galley, managing director, Halifax, said: “Following four months of decline, average house prices in July experienced their greatest month-on-month increase this year, up 1.6 per cent from June and comfortably offsetting losses in 2020.
“The average house price in July is the highest it has ever been since the Halifax house price index began, 3.8 per cent higher than a year ago.
“The latest data adds to the emerging view that the market is experiencing a surprising spike post-lockdown.
“As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices.
“Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.”
Mr Galley cautioned: “However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic.
“As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent.
“In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium term.”
Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “Only time will tell whether this recovery is a long term trend, or simply a mini-boom.
“We’re living in a time where many people’s finances have been impacted and household finances are stretched, so any growth we’re seeing now could well be short-lived.
“It’s important to consider that rising house prices may be positive for the market, but some groups of home buyers will not necessarily see this as good news.
“First-time buyers are facing challenging times. Not only do rising house prices mean they will now be getting less for their money, but this comes alongside a shrinking range of high loan-to-value products available, increasing costs for mortgages and intensifying scrutiny from lenders.
“The impact is that many first-time buyers may feel locked out of the market.
“In recent weeks we’ve seen some lenders reintroduce higher LTV (loan-to-value) products. We hope this trend continues as more support for first-time buyers is desperately needed.”
Tomer Aboody, director of property lender MT Finance, said: “With a strong July on the back of a downward slide in the preceding few months due to lockdown, the housing market remains a vital driver of the UK economy.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “We are pinching ourselves as strong pent-up demand for most types of property, especially small houses, and much of it brought forward by the stamp duty holiday, is supporting an upsurge in the number of sales agreed.”
He continued: “Looking forward, we are being told the housing market revival will be tested by rising unemployment and the imminent end of the furlough scheme, but there’s not much evidence of a slowdown at the moment.”