Average home hits landmark figure as market stays red hot

The average price of a house in the UK has hit £250,000 for the first time as the  market shows no sign of cooling.

According to the latest index produced by the Nationwide, prices have grown 0.7 per cent in the past month and the annual house price inflation is 9.9 per cent - meaning the typical home has appreciated £30,000 during the period of the pandemic. 

“Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September. Indeed, mortgage applications remained robust at 72,645 in September, more than 10 per cent above the monthly average recorded in 2019” explains Nationwide’s chief economist Robert Gardner. 

He says these factors, combined with a lack of homes on the market, show why price growth has remained robust.  

“The outlook remains extremely uncertain. If the labour market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences as a result of the pandemic to continue to support activity” he continues.

“However, a number of factors suggest the pace of activity may slow. It is still unclear how the wider economy will respond to the withdrawal of government support measures. Consumer confidence has weakened in recent months, partly as a result of a sharp increase in the cost of living.”

Agents are predictably delighted - but say the picture is more nuanced than Nationwide’s headline figures suggest.

“Prices reflect transactions but probably these are masking larger differences between houses and flats as well as the continuing shortage of supply. The bidding wars and stamp duty holiday may be over with rising mortgage rates and inflation more of an issue, but on the ground, there is still a determination to move” says Jeremy Leaf, north London estate agent and a former RICS residential chairman.

Guy Gittins, chief executive of Chestertons, adds: “Buyer demand remains unsatisfied and properties are going under offer increasingly faster. In October we witnessed a 22 per cent uplift in the number of offers being made and a 26 per cent increase in agreed sales compared to September.”

The managing director of Barrows and Forrester, James Forrester, has this to say: “The chances of a house price decline this side of Christmas are slim, to say the least. We’re still seeing an incredibly high level of market activity despite the end of the stamp duty holiday and while there are murmurs of an increase in interest rates, this is unlikely to deter the average homebuyer who will continue to benefit from a very favourable cost of borrowing.”

Meanwhile some agents believe the tapered end to the stamp duty holiday - as opposed to the cliff edge which looked possible early in the year - has had a role in keeping the market strong. 

“The first look at a post stamp duty holiday market suggests that the tapered deadline has helped to negate any market collapse. That and the continued high demand for housing, of course” says Marc von Grundherr of Benham and Reeves agency.