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Average UK house price hits record high after strong March

The latest house price index by Halifax shows the average UK house price hit a new record high of £254,606. The housing market picked up strong momentum in March.

UK house prices increased by 1.1% from February to March and was also up 6.5% year-on-year. On a quarterly basis, house prices increased by 0.3% in January to March compared to the preceding quarter from October to December. This strong growth led to the average UK house price hitting a new high over £254,000.

Additionally, the number of property transactions increased in February to their highest level since March 2007, according to HMRC. There were 147,050 residential transactions, seasonally adjusted. This is a 23% rise from January and up a whopping 56.2% from February 2020.

Russell Galley, managing director of Halifax, comments: “A year on from the early days of the first national lockdown, March’s data shows that house prices rose by 6.5% annually, or £15,430 in cash terms.

“Casting our minds back 12 months, few could have predicted quite how well the housing market would ride out the impact of the pandemic so far, let alone post growth of more than £1,000 per month on average.”

Confidence in the housing market

In the past year, the housing market has performed remarkably strongly. As the search for more space continues and as many people have reassessed their property priorities, there is strong demand in the housing market.

On 3rd March, the Spring Budget, announced by Chancellor Rishi Sunak, brought confidence to the housing market. The stamp duty holiday was extended for three months and was given a tapered end for an additional three months. On top of that, the new 95% mortgage guarantee scheme was announced for the start of April.

“The continuation of government support measures has been key in boosting confidence in the housing market,” he says. “The extended stamp duty holiday has put another spring in the step of home movers, whilst for those saving hard to buy their first home, the new mortgage guarantee scheme provides an alternative route onto the property ladder.”

Moving forward

The latest RICS Residential Market Survey shows the housing market picked up sharply over the month of March. Indicators on enquiries, new instructions and sales all improved remarkably compared to February.

In March, new buyer enquires rose to a net balance of +42%. This is up from zero in February. New instructions also improved from -28% in February to +22% in March. Additionally, greed sales increased dramatically from +7% to +50%. With this strong momentum, the housing market will likely remain busy in the coming months.

Russell Galley concludes: “Overall we expect elevated levels of activity to be maintained in the coming months, with consumer confidence spurred on by the successful vaccine rollout, and buyer demand still fuelled by a desire for larger properties and more outdoor space, as work-life priorities have shifted during the pandemic.

“A shortage of homes for sale will also support prices in the short term, as lower availability always favours sellers. However, with the economy yet to feel the full effect of its biggest recession in more than 300 years, we remain cautious about the longer-term outlook. Given current levels of uncertainty and the potential for higher unemployment, we still expect house price growth to slow somewhat by the end of this year.”

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