Industry reacts to Halifax HPI
Halifax has published its September 2020 House Price Index (HPI), which shows a 7.3% rise annually.
The increase in house prices has been largely attributed to the Stamp Duty holiday introduced as a result of the coronavirus.
Nicky Stevenson, managing director at Fine & Country, said: “The property market has been basking in its own economic microclimate lately, characterised by a relative feeding frenzy for larger, more expensive homes.”
Historically, the market looks to first-time buyers as an indication of direction. However, as existing homeowners have the buying power to spend more, they are driving house price growth, according to Stevenson.
A rise in property prices at this end of the market can lead to a disproportionate effect on house price statistics.
However, Stevenson said: “There will be a flip side though. When this extra demand for larger homes starts to return to normal, the annual rate of growth overall could sit down as quickly as it stood up.”
Lucy Pendleton, property expert at James Pendleton, added: “The often frothy Halifax index has lived up to its reputation and is pushing the bounds of credibility here.”
Pendleton stated that the data does, however, underline how much the housing market has become the economy’s iron lung.
Furthermore, Pendleton does not expect this property price rise to last.
She said: “The three main drivers remain in play for now are homeowners moving to larger properties, stamp duty relief and pent-up demand, which is still being felt because of delays to the conveyancing and mortgage approvals process.”
She concluded: “Buyers at the upper end of the market are confident but not careless, and owners of poor quality stock are having to increasingly watch from the sidelines as their properties sit on the market for extended periods. This is a house price boom fuelled by aspiration, not loose money.”
David Westgate, group chief executive at Andrews Property Group, said: “Since the property market reopened, activity has been frenzied, the bricks and mortar equivalent of the last days of Caligula.”
Westgate pointed to the stamp duty holiday and trend of people working from home as to why demand has risen.
He added: “The growing conservatism of lenders who have one eye on rising unemployment and a potentially unprecedented fiscal pinch is playing a major role in cooling the market down.
“For now, we have a huge pipeline of property transactions tied up in solicitors’ hands, all waiting to complete before the end of the year to avoid increased stamp duty charges.
“The fact that the market is cooling now means we will hopefully avoid a cliff edge scenario at the end of March when the stamp duty holiday ends.”