Key Highlights
- Home prices in UK jumped +5.2% in August compared to same month last year
- M/m home prices increased +1.6% from July to August
- Price of average house in UK hit $324,241
- Number of sales soared to double five-year average
Great Britain’s Halifax House Price Index, under the umbrella of IHS Markit and the longest-running harbinger of Britain’s property market, found that UK home prices increased by +5.2% in August compared to the same month in 2019. This home price increase is the strongest annual increase since the end of 2016.
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Economists with Reuters anticipated that Great Britain’s home prices would increase +1.5% from July to August but the market beat that price by rising +1.6%. The average price of a UK home was $324,241 in August.
Russell Galley, managing director at Halifax, said that market activity was “…fueled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to the stamp duty…” on properties with valuations above approximately $600,000 to help stimulate the home buying and selling process.
Galley was quite clear in saying that “…this level of price inflation…” will likely be unsustainable once “…the true scale of the impact of the COVID pandemic on the labor market becomes apparent.” Galley refers to economic experts pointing to lower household earnings due to the pandemic along with continued and perhaps worsening of unemployment. Galley emphasized, “…we do expect greater downward pressure on house prices in the medium-term.”
According to the Bank of England, the number of approved mortgages increased from 39,900 in June to 66,300 in July. Though a good sign for the UK housing market, this 66,300 represented a housing loan market still -10% lower than the 73,700 mortgages approve in February, pre-pandemic.
Jonathon Hopper, CEO of Garrington Property Finders, believes that rising home prices are “…ever more out of kilter with the wider economy…if the Autumn brings further fragility to the economy and again in March 2021 when the stamp duty holiday comes to an end…” and those taxes are reinstated to home purchase in the United Kingdom.
UK sales soared +69% above the five-year average in the week ending August 29, the 15th busiest week on record. Sales in the UK’s capital exceeded those in the rest of the country…the number of offers London sellers accepted in August were the highest on record. Sales outside of London were +60% above the five-year average, the biggest total in approximately two years.
Thanks to CNBC and Mansion Global.
Also read: Is Now the Time to Buy Investment Properties?, Consumers Less Confident BUT Still Curious About Housing, Home Prices Thawed in July 2019
