Average house price topped £245,000 in August, says index

The average price of a property has tipped over £245,000 for the first time on record, according to an index.

Halifax said the average UK house price in August was £245,747 – 5.2% higher than the same month a year earlier.

Property values were up by 1.6% month on month.

But with household incomes under pressure and job loss announcements mounting, the report said it is “highly unlikely” that current levels of house price growth will be sustained.

A downward pressure on house prices is expected to build in the medium term, it said.

Russell Galley, managing director, Halifax, said: “Annual growth now stands at 5.2%, its strongest level since late 2016, with the average price of a property tipping over £245,000 for the first time on record.

“A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled 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 stamp duty.

But he added: “Notwithstanding the various positive factors supporting the market in the short term, it remains highly unlikely that this level of price inflation will be sustained.

“The macroeconomic picture in the UK should become clearer over the next few months as various Government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.

“Rising house prices contrast with the adverse impact of the pandemic on household earnings and, with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium term.”

Commenting on the report, Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “We’re fast approaching the end of the furlough scheme and with it a period where the employment market could be incredibly challenging for many. As such, the demand we’re currently seeing might begin to fade.

“In addition, large numbers of buyers are already locked out of the market. First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products. The number of 90% LTV mortgage products available has dramatically decreased.

“Alongside this, rising house prices means first-time buyers will be getting less for their money, presenting a further hurdle to getting on to the property ladder.”