House prices in the UK are rising at their fastest rate since the start of the year, largely due to a shortage of homes on the market, according to mortgage lender Halifax.
Its house price index shows property values up 4.5% between August and October compared with the same period in 2016, the fastest pace of growth since February. The average house price was up 0.3% between September and October, rising to a record £225,826.
The annual rate hit a post-financial crisis peak of 10% in March 2016, a few months before the Brexit vote, before falling to 2.1% in July this year. Since then price growth has picked up again.
Russell Galley, managing director of Halifax Community Bank, said low mortgage rates, high rates of employment and a shortage of homes for sale was pushing up prices “and is likely to do so over the coming months”.
He added: “Increasing pressure on household finances and continuing affordability concerns are some of the factors likely to dampen buyer demand. That said we do not anticipate the base rate rise will be a barrier to buying a house.”
UK house prices (seasonally adjusted) Photograph: Halifax
Forecasters at the EY Item Club reckon house prices will remain subdued for the rest of the year and then rise by a modest 2%-3% next year, as squeezed households hold back from buying property.
Estate agents were more upbeat and dismissed the notion that the pick-up in price growth was a last hurrah following the Bank of England’s interest rate rise last week to 0.5% – the first increase in borrowing costs in a decade.
Lucy Pendleton, the founder director of estate agent James Pendleton, said: “We’ve since had a rate rise but what you’re seeing isn’t one last hurrah as people rush to grab the best mortgage rates. It’s that same old ball and chain around the UK property market’s neck – weak supply.
“There will also be an echo from September’s back-to-work bounce, as deals brokered before the summer holidays complete in the autumn, but such a strong second month is uncharacteristic and shows the market in surprisingly rude health.”